Ha I don’t think I’ll be taking a truck into the muddy woods. Now do I need a Laramie for the muddy woods? Nope. Purely for comfort.
Even if you have gap insurance?
Ah I see. Aren’t there some lease deals that do apply down payment toward the purchase? Or did I misread that?
Not sure.
MSD is different .
Gap insurance may not get your down payment back. But it will keep you from having to pay up extra after an accident if the pay-off from your personal insurance is less than the buy-out to the lease finance company.
HA! That’s pretty great.
Gap insurance will not get a lease downpayment back. Here is how it works, with simple numbers to keep it easy.
Lease price: $48,000
Residual: $24,000 (50%)
Money Factor: 0.0000 (anything else just complicates the basic scenario, but see below.)
Term: 24 months
Under these terms, the total amount you give to the finance company is $24,000, regardless of when you do it.
Scenario A: $0 down. You pay the finance company $1,000 a month for 24 months, for a total of $24,000
Scenario B: $12,000 down, you give the company $500 a month for 24 months, for a total of $24,000.
Scenario C: $24,000 down, you give the company $0 a month for 24 months, for a total of–yes, you guessed it–$24,000.
If the money factor is not zero, things get slightly more complicated. In the scenarios above, you pay interest on $24,000, $12,000, and $0, respectively. But probably pay some other fees and origination in all cases.
But the odds of losing your down payment is high because of how gap insurance works–it only kicks in if you owe more than it is worth, and typically people are upside down during leases (especially early in a lease). Gap doesn’t kick in if you owe less than it is worth, and so you would lose your down payment.
[ETA: rereading this, I have given great numbers on why putting money down to lower your lease payments isn’t financially attractive, but poor numbers about how gap insurance works in there. When I have more time I’ll do an example like that.]