Single Payment Car Lease Surprise

[RetMD21]

Deceased FIL died of Covid 19 months into a 36-month lease. The car was promptly returned in good condition. We were surprised that the deceased was billed for an additional charge and there was no refund at all. I think he had reasons for the nature of the lease but it turned out to be an expensive fiasco. MIL doesn't drive. The lease was solely in his name and we are in Michigan. Whatever the advantages of the single payment are supposed to be it sure was disadvantageous in this case. I thought of making this a poll to have people guess how much the refund would be. I think most would be surprised.

 

[Brat]

Try to get a copy of the lease. Most have the option of keeping the car for the amount quoted in the lease. Today most leased cars are worth more than the predicted value in the lease document, then sell the leased car.

See the recent Utube video by Steve Lehto, an attorney in Michigan as I recall. Frankly you may consider contacting the fellow about what happened to your FIL.

 

[gauss]

DMIL paid about $10,000 up front for a car lease to lower the monthly payments. She died about a year and a half into the lease.

The leasing company told us that we could return the car now and the lease payments would stop, but there would be no refund of any of the $10,000 up front payment.

We ended up keeping the car throughout the lease and actually purchased it in the end. It was very low mileage.

DMIL was also in Michigan FWIW.

Your story doesn't surprise me from our experience.

-gauss

 

[Jerry1]

My father in law leased a vehicle in his own name and passed away about a year into a three year lease. We live in Michigan too. We drove it to the dealer and said there was no money in the estate - it all went to is wife. They sent a bill and we ignored it on advice of attorney. Never heard from them again.

I’m going to lease a Lamborghini if I ever have a terminal illness In my name only.

 

[pb4uski]

We have a good friend who got a big new leased SUV.... then unfortunately died about a week later.

The SUV had 500 miles and the surviving spouse really didn't want a big SUV, but because both their names were in the lease she was stuck with the lease. If only his name had been on the lease she could have returned the leased SUV and gone out and get what she wanted.

 

[RetMD21]

My father in law leased a vehicle in his own name and passed away about a year into a three year lease. We live in Michigan too. We drove it to the dealer and said there was no money in the estate - it all went to is wife. They sent a bill and we ignored it on advice of attorney. Never heard from them again.

I’m going to lease a Lamborghini if I ever have a terminal illness In my name only.

Good plan about the Lamborghini. The leases favor the company. Had this been a month to month the shoe would have been on the other foot.

 

[Sunset]

From this thread, I can see that leasing is hazardous to the health

I wonder if OP can (since they haven't paid the bill) go back and ask for the car back. Then Sell the car, and when the lease is up, pay off the value stated in the lease agreement.

Probably worth at least $10K and more likely $15,000 as can sell it now, and pay off later, based on another recent lease return thread.

 

[skyking1]

1) Lease vehicle in your name only
2)purchase mondo life insurance policy
4)Die
5)?
6)Spouse profit!

 

[ncbill]

DMIL paid about $10,000 up front for a car lease to lower the monthly payments. She died about a year and a half into the lease.

The leasing company told us that we could return the car now and the lease payments would stop, but there would be no refund of any of the $10,000 up front payment.

We ended up keeping the car throughout the lease and actually purchased it in the end. It was very low mileage.

DMIL was also in Michigan FWIW.

Your story doesn't surprise me from our experience.

-gauss

Never put any money down on a vehicle lease.

Roll everything possible into the monthly payment.

Why?

Because you will never get any lump sum paid upfront back in the event of:

1. death as above but more commonly:

2. an accident where the vehicle is unrepairable & totaled by the insurance company...given this you also need gap insurance, which covers the difference between the insurance payout & what you still owe the leasing company, though it's often included in a lease nowadays.

Sometimes you luck out, of course...my truck lease ended last summer & I bought it out.

Because of COVID craziness it's worth several thousand bucks more than the contract residual (plus tax on the residual) that I paid.

BTW, it seems rare for a one-pay lease to be a good deal...I've only seen a handful, primarily for pure EVs in limited markets (usually CA) over on leasehackr [sic] dot com where there was enough of a discount to make paying everything (including taxes & fees) upfront worth it.

And IIRC, in those cases those who jumped on the lease confirmed there was pro-rata refund language in the lease contract.

 

[pb4uski]

+1 never leased but if I did I would try to put as little down as possible.

 

[gauss]

Re: DMIL putting $10,000 down on the lease...

^DMIL was not really into strategic financial thinking Fortunately for her, between funding her 401k all through the 80s and onward, company DB pension, and disability SS, she did quote well for herself despite this!

-gauss

 

[HI Bill]

I wanted to lease a Mazda RX8 the first year it came out, as I only planned to drive it for a year or two. The cost of the lease and terms weren't favorable, so I was going to pay cash. I ended up getting a 36-month loan at 0% interest, which was far better than a lease! I kept it for a couple more years than intended, and sold it at about half the purchase price. Still cheaper than leasing.

IMHO, the only time a lease makes sense is when you own a business and can write it off. Even then, the company is probably better off purchasing the vehicle.

 

[Bamaman]

Leasing is essentially financing a vehicle for "X" dollars a month with a big balloon payment at the end. The finance source is advancing about 115% of the invoice total on front end too. And the principal balance is coming down slowly due to low monthly lease payments.

Any lease that must be terminated very early will most likely be liquidated at a loss, and the deceased's estate will be liable for that loss.

If a lease is terminated in the last year of the lease, there could be some equity in the vehicle. But that's a rare instance. It would all depend on the lease end value and the used car market at the time.

Whether the finance source chooses to go after any estate for a deficiency is another matter. I'd say it may not be good for public relations.

 

[street]

Leasing to me means a monthly payment not a down payment. I would be very hesitant to put that much down on a leased car.

 

[ShokWaveRider]

My current Lease (As most do ) Terminates on death if there is no joint Lessee. Estate is liable for nothing. Every lease I have had has been the same. BUT, any down payment as noted in previous posts is forfeited.

We only ever lease in one name. Again, as noted no money down unless ones is aware of the details. No one is liable for the buyout as that is always optional.

I have leased my last 8 daily drivers. 3 of them were pre-paid leases, knowing the rules. DW would have driven the car till the end of anything happened to me.

As long as one knows the rules, implications and liabilities, leasing is a great option in these days of very cheap low interest money and IF one changes their cars every 3 years, which we do. We have not paid for any car maintenance or repair since 1990.

As with everything it is buyer beware. MMDV.