How am I saving on Taxes???
As a consumer I lost nothing? I lost ability to buy car $15K which is what VW and I agreed to. So I would disagree
That would be state dependent, but in many states you only pay sales tax on leased amount, rather than whole car price.
You rented that car, you never owned it. VW does not owe you a penny.
OP did you put money down as a capital cost reduction at signing? I think there are some strong arguments why the captive would owe you at minimum a prorated portion of this amount if they are getting overage payoff. If so Iâd check with the state department of consumer affairs.
As a worst case hypothetical, letâs say you put $20k down and totaled the car the next month. Does the captive owe you money from the payoff? Iâd love to see that play out in court even if the contract says the captive keeps overages. I donât think the answer is as simple as âyou donât own the car.â
The person or entity paying the insurance should get the benefits of said insurance, including any excess above the balance owed.
If a finance co wants to play the âwe owned the assetâ card they should have paid for that insurance.
Canât have it both ways.
But clearly thereâs two sides of this argument where neither side will change their mind so letâs agree to disagree.
Is V short for VW :). Part of insurance settlement includes sales tax. How can VW keep the sales tax if they arenât paying it? Insurance company includes sales tax because in theory when I receive funds Iâm going to go buy another car for same amount and pay sales tax. VW isnât buying another car. Are they entitled to sales tax too? Are they turning around and sending sales tax to the state?
TY, definitely not as simple as âyou donât own the carâ.
Absolutely agree and like to think of this as an open discussion as opposed to an argument :).
Iâll save the arguing for VW. Lol
Not everyone who disagrees with you does so because they have an axe to grind because they work for Audi, VW, etc.
So we fall into the same issue here as with 3rd party buyouts. The below-market value buy out amount is for the lessee and the lessee only. The insurance company is a 3rd party entity purchasing the vehicle.
More importantly though, the lessee is purchasing the insurance after agreeing that the lessor receives the overage. Itâs an informed decision (well, assuming one actually reads their contract).
Now, we can debate over if anyone feels this is right and if itâs how things should be, but ultimately, everyone thatâs found themself in this position took out insurance on the vehicle after agreeing that the overage goes to the lessor and is now frustrated the insurance they agreed goes to the lessor is going to the lessor.
Most of people never thought about it, because having an overage was just not a thing.
Now they are having buyers remorse.
So, whoâs fault is that that banks set RVs below the market to move metal? And when the market improves, they essentially say to the insurance and the lessee âforget about RV that we set, we want the current market value. Tough luck if you wanted to buy the car out at RV and have to pay more for the replacement nowâ.
Iâm on the fence in this argument, BTW. It is really a gray area, until there is a precedent in court.
I think Iâd have a bigger issue with someone like Toyota doing this than any of the companies that include a gap waiver in their lease.
With a gap waiver in the lease, theyâre essentially saying âif you total our asset, we will take market value replacement from your insurance, no matter what that is, and you get to walk awayâ. Most of the time, that works out in the lesseeâs favor. Currently, it doesnât. Itâs two sides of the same coin thatâs part of renting someone elseâs property.
Where I really have trouble with this is where money down as a capital cost reduction doesnât seem to factor in to any overage payments. That is not how any other loan works when it comes to loan payoff balance. Of course in any other loan the amount you put down would affect the payoff amount, how is it legal for a lease to be any different?
The contract as written is only enforceable up until the point itâs litigated, and then state laws will have precedence over the contract language. Due to the small potatoes amounts of money in question, it would take a class action lawsuit or state regulatory/legal intervention to get this litigated for an actual answer.
Right, but what about the lessee whoâs actually the one who will have to replace his vehicle at market value? Banks do not âreplaceâ their vehicles. âNo matter whatâ is the GAP, no one forces them to include it, Iâd think.
They are getting every penny of market value for the assets they own.
If we take the âreplace the lease at market valueâ concept to the extreme, should an insurance payout also supplement any incentives that were in place at the time of the original lease but arenât there on the new one? Should it pay out the amount to go lease a brand new car or just a partial lease on a used car?
A lease isnât a loan, itâs a rental contract.
Just the current value. If you paid $30K a year ago, then now you may have to pay $40K for the same exact replacement car. So the extra $10K from the insurance pay out should make you whole, instead of overpaying the bank just because they intentionally undervalued their asset.
How often do banks actually make the RV too low? Yah, it may be happening right now, but certainly not intentionally. If anything, banks usually inflate the RV.