Welcome to LH, where everyone is entitled to an opinion, whether it’s valuable or not.
Can you perhaps ask BMWFS if they can provide documentation showing this?. It would great if it’s dated prior to recently. Now that I’ve seen contracts from other brands, makes me think this could be documented somewhere else. If it’s documented that they keep the money, then you’ll need to accept that since you had the option of taking out the minimum required coverage for the car. I don’t get the correlation between the equity snd higher coverage.
Pretty sure the correlation is that if he had $1000 deductible instead of $500 then BMW would have received less money and obv op would have had a lower premium.
I don’t know what his insurance policy is, but they usually state that they will pay you for other losses and damages above the actual car value.
Theoretically anything above the car payoff is supposed to help him get back into a similar car/lease. With him not being able to get that equity he now either has to pay more or choose a lessor car. That isn’t greed, that is just wanting insurance to make it equal again.
The contract buyout/payoff only applies when the lessee buys it out. In this case, it’s a 3rd party buying it out, just happens to be the insurance company vs a dealer. So then the 1st question is what payoff amount does BMWFS says apply to the ins co? Then if there even is any excess at that point it’s still a question of who’s entitled to it.
Take a look at ANY lease contract from any manufacturer - they all do this… that’s why I recommend to my clients to put as little money down as possible into a lease, as its a sunk cost, effectively. You don’t get to complain about not getting any equity back when you didn’t have an equity stake in the first place. Read the long and boring contract next time!
Did you bother to read the thread? Several of us have posted the text from our contracts where they DON’T do it, so your comment is demonstrably false.
I find it surprising BMW doesn’t have a clause in their contracts addressing this as this can happen often enough. If I were OP, I would fight this to death as the money in question high enough for an individual and peanuts for BMW. Even a $150 demand letter from a lawyer might be enough to tip it to his favor.
I would recommend BMW Select Financing next time. It has a balloon payment of 25% or so (depends on the model) for 60 month financing so the monthly payment is closer to a lease than a full on financing option. It also comes with 0.9% interest in some models making the interest rate lower than the lease MF even with MSDs. Best of all, you will own the car so you will be entitled to any insurance payments (or tax credits if you are buying an EV or PHEV).
I am honestly surprised it is not popular among the leasehackr community as a financing option especially for popular lease models like the 330e.
So we’ve learned from this thread that OP should read the contract and that, if the contract doesn’t specify anything in this situation, they should contact BMW FS and the insurer (and speak to the supervisor). And, if that doesn’t resolve the situation to the OP’s satisfaction, OP should contact a lawyer.
All of which was covered in the post on the same topic in 2018 and in, like, the first 15 threads on here.
OP, it’s up to you to determine how much you want to fight. I personally would fight pretty hard for it. Let us know how it turn out.
Why have forums and not a FAQ? Most topics could be covered by a FAQ. I found this thread useful, but if it doesn’t interest you feel free to not read it.
Financing a BMW to potentially get a positive equity insurance payout? lol no. In every time except the current time, that’s going to put you many thousands of dollars in the hole compared to leasing.
We don’t discuss things like this because it’s a leasing forum, not a personal finance forum. Otherwise the suggestion is - pay cash or you can’t actually afford it.
The balloon payment options have a time and a place (which is largely driven by unique tax situations like Chicago or EV tax credits), but they also often get away from the major benefit of leasing, which is offloading risk to the bank.
since this is tagged NJ and BMW, I decided to dig up my policy. I also am unable to find any language about overpayment from insurance. The clause only speaks to underpayment.
When a 0.9% financing option is available and you can invest to earn better than 0.9% return on your money, your advice is to pay cash for a car purchase or don’t buy at all? Also while this is a leasing forum, it is ultimately a forum where people discuss how to find the best deals and there could be situations where financing is the better deal.
Agreed but it also has benefits (other than the extreme example of the OP’s situation) such as no mileage limit and ability to modify the car. I also remember BMW incentivizing finance deals more favorably than the lease deals on certain models. I am not saying balloon financing is better than leasing, just saying there are some BMW models that would make more financial sense to balloon finance than lease depending on one’s situation especially with PHEVs with the tax credit opportunity.
Select Financing is not like a lease where you can just turn in the car. You either have to make the balloon payment at the end (refinance or cash) or trade in the car. So you can on the hook if the car is worth 15% and the balloon payoff was 25%.
BMW Owner’s Choice is identical to leasing (although no GAP or acq fee) where the car is turned back in after the term.
