I’m thinking about doing a single pay lease. What happens is the car is totaled during the lease. Would I be risking whatever the remaining term of the lease? Would gap insurance make any difference.
Why one pay versus MSDs?
What state?
Msds saves you more than a one pay. If you’re buying in NY, I understand no msds but otherwise msds makes more sense.
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I think TX, so tax credits might come into play for one-pay.
Correct and you get to save .00100, at least for Toyota and I think you do 1% tax on BMW
OP tagged BMW. Max 7 MSDs reduces MF by .00035 while one-pay reduces MF by only .0003. Doesn’t make sense, but it is what it is.
It is what it is!
I’m in Texas. I just got done with a divorce so my credit took a bit of a hit. Maxing out MSD’s could be an option too.
What about maxing MSDs at signing, and then paying the sum of all remaining lease payments the following day?
More money upfront, yes, but no installment payments.
True but then you’re effectively losing the interest you could gain from the lump sum payment?
That sounds like all risk, no reward.
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I thought about doing a one pay with trade in value of an owned car. I assume you would then recover the previously paid sales tax via trade in, which for us is about 3k on 20k. It also helps sometimes getting lower rates on other loans (ie rental properties etc) when your required minimum monthly payments are low (ie I like leasing, but don’t like large lease payments on my credit)
The reward would be the lowest money factor possible combined with the convenience of not making a payment every month.
My other thought is this. I can increase my contribution to my 401K which would be equal to my monthly payment. The nice thing is the contribution would be pre-tax dollars.
Wouldn’t the better action be to use the liquid cash to max out your 401k each year on Jan 1 rather than pay into it month by month throughout the year?
If OP is in Texas and it allows them to easily get tax credits then I don’t think it’s a horrible idea. In most states doing a one pay over MSDs is just a bad use of money.