Downsides of MSDs

Does anyone have any bad experiences in loading up on MSDs? Am thinking that the dealer technically has more of my cash available to deduct for post-lease charges (wear and tear, scratches, etc…) but not sure if it ever plays out that way.


It’s a pretty sound investment, most always you’re putting your money with the vehicle manufacturer’s financial division and these guys most always underwritten with around AAA type bonds. Some regions like with South East Toyota, you’re using their financial institutions but again super stable.

As far as wear and tear, they will want the money either way if repairs are needed.

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I’m assuming the only downside is that you are tied up with the dealership you got the car from, in essence if you wanted to switch to a different brand first you would need to end your contract with the dealership in order to get your deposit and run the risk of getting a charged for post-lease fees (wear and tear, scratches, etc…) rather than taking your trade-in to a new dealership and bargain a new lease (most likely they will eat up the wear and tear or scratches).

Wrong on all statements.

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the downside of an msd in my opinion is that you are forgoing the opportunity to invest those dollars.

The investment return is off the charts, I am more concerned with the the ability of the dealership to use my funds in hand against me at the end of the lease. If that’s not a real issue, sounds like MSDs are often a no-brainer.

The bank gets the money, not the dealership. Inspections are performed by people without any knowledge of whether you have MSDs or not.


I did MSDs for Benz and the biggest downside was the finance manager’s lack of understanding on how to actually implement them. It was a bit of a kerfuffle, but we got their eventually.

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My current lease deal would yield $900 savings over 36 months for a $4725 MSD. It’s nice to lower monthly payments by $25, but this yields ~6% annual ROI (300/4725). Not sure that’s worth it, but the funds might be sitting as cash otherwise (i.e. 0%).

@Quest777 Which car are you thinking of getting? Most of the time, MSDs save way more than that. Volvo and Audi are some of the worse though (only .00005 reduction per MSD).

It’s an Audi Q5 and my potential lease is already at the base MF which could be why the effect is much lower.

generally speaking, the return on “investment” of using MSD’s warrants its use because you can yield a higher return than letting it sit in the bank.
However, you need to be aware of risk of loss in case you total the car.
There’s no straight-forward answer if you get the money back. You can do a search on this forum, you will get a lot of opinions. You would need to evaluate on a case-by-case basis based on the car company and insurance company used.

One down side is if you try to swap the lease with someone. Most people who are looking to receive a swap a lease don’t have tons of cash to reimburse your MSD.

The return on the investment is anywhere from 20% to 40% and as close to guaranteed as you can get! If you know of another investment like this PLEASE let me know and I’m all over!

The only downside, if you want to consider it one, is if you happen to need the cash for some other reason. But you just have to look at it as a term investment and need to ride it out for the lease term.

Most all auto finance companies include GAP insurance as part of the lease contract. It is grossly misunderstood that if you have a total loss on a lease you’re going to get screwed. Lendera have wised up and realize by including it they are also protecting thier own investments.

To give you an example, I just leased a Volvo and already included in my lease is GAP insurance. The standard coverage 120% of the cars value. I’m good even if I totaled it driving it off the lot.

very true, very difficult to find someone to give you lump sum of cash upfront, not only because they don’t have it but also because they don’t understand the MSDs to begin with and are just turned off by it.

i don’t think my BMW lease includes GAP insurance, but i might be mistaken.
When i tried to personally look into it i called both the captive and my insurance company and they were pointing fingers at each other with no clear answer. Others on this forum have experienced similar responses. I haven’t yet heard from someone who actually totaled a car with MSDs and how it went down.

@305Hackr let me help you with this, BMW does include it with you lease. I don’t know the exact coverage amount but it’s there. I have GEICO and it is also included, actually you can’t not have it because it protects them as well.

BMW’s finance page confirming its included

Realizing that link might not be working, if it doesn’t here is the page cached.
Cached page from BMW

that’s about 2.5 bitcoin. save $25 a month or “invest”?

Thank you for providing this info @DNJA