Quote:
Originally Posted by EZgoE90
padddy what do you mean by"Depending on your particular circumstances you may or may not recover any down payment".
Are you saying that someone could get their down payment returned? What would those circumstances be? I am getting ready to return my lease and put a good size down payment and am wondering?
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Say you lease a 60K car for 3 years, residual 50%. (Very general numbers here)
Option A: 10K down. 20K financed over 3 years. Monthly payment $700
Option B: 0 Down, 30K financed over 3 years, Monthly $920
Now say you went Option A and totalled the car after 1 day.
Your insurance company will basically replace your car with a new car, which will be option B, what you would have paid if you had not put anything down.
The further you get along in your lease, the less of your downpayment you lose, because the monthly savings made possible by the original downpayment, in effect add up. So "depending on your circumstances" basically means depending on how much down and how long into the lease before car gets totalled.
The insurance company pays the current value of the vehicle most of which goes to BMWFS, you will get any left over which may cover some of your original downpayment but unlikely.
If you get totalled on the last day of the lease, then you basically get nothing, BMWFS will get everything, but that's fine because your downpayment was used to its fullest and you have lost none of it.
That's my understanding of the downpayment danger concept, I could be off base though.
It boils down to how much risk you are willing to take to save a relatively small amount of money (more down=more saved). Putting 10K down on a 60K vehicle saves about $1,100 in interest over the 3 year loan.
You still pay sales tax on downpayments, so what you save by making a downpayment is the interest charge you would pay to BMWFS to finance that amount.