One Pay Lease Pros and Cons?

Ask the Hackrs
1

Hi, can anyone here offer me the pros and cons to a one pay lease - in the event of a total loss, bargaining power? Or anything else!

It would be a 24 month lease in the region of $275.00 mo if that makes any difference.

Also, when using the calculator, would equity in your current car be inputted into down payment?

Thanks

2

Pros
No monthly payment
Savings on interest
Cons
Money can be invested at a potentially higher rate.
Risk losing your drive offs if the car is totaled. However, this is no different than a standard lease with drive offs.

There is nothing special to be gained (or lost) really with a one pay lease. You will save a few hundred to a few thousand on interest, and will not have a monthly payment. Both of my recent leases have been one pays. I prefer no payment, and I’m cheap :grinning:

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3

Thanks for your input. Any idea on the other question?

4

It’s a one pay, there is no down payment. I would just lower final one pay by your “equity” amount.

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5

The calculator faq walks through different ways to apply trade equity depending on what you’re trying to determine from the calculator

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6

Last I checked, both MBFS and GMF prorate returns of one-pays if there’s a total loss.

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7

Yeah, I have not had an issue, thankfully, so I have no idea how they would pay out. My understanding is you will get back a prorated amount that should be equivalent, or close to, the payments that would have been remaining. YMMV…

8

Good luck with that. One-Pay is about a 20% guaranteed return.

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9

Thanks for all the insight to the other question.

Just to clarify, my equity is in the form of my current lease return. Payoff is 21k, dealer is offering 25k

10

Have them write you check for the buyout

11

Do all car makers offer one pay leases? Never really looked into this.

12

No, not everyone does

13

Wasn’t aware of that :thinking: Any idea if Ally does?

14

Pretty sure Ally does, and USBank does not.
At least according to Ally website, they do.

IIRC @Cody_Carter had a reply mentioning this one time. Perhaps he can chime in and confirm?

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15

Curious how you came up with a 20% return on a one-pay lease? Are you thinking of MSDs?

I can’t imagine a one-pay resulting in more than ~5% total savings over the course of a lease

16

Ally does but not sure it makes sense

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17

If you calculate one out, you may find that not to be the case😁

18

Yeah, a 20% yearly return on a single pay or MSDs would be a stretch, but has in the past been possible with some brands. I think the highest annual return I ever had was 32%!

Toyota typically seems to provide the most aggressive MSD program.

19

For me, it depends on the brand and whether the residual could be inflated. In the case of an Acura RDX, I did a One Pay as the value tends to decrease ratably down to the residual value over the term of the lease. As such, if it is totaled or stolen, the insurance company is going to pay FMV - the lease end residual goes to the leasing company and difference back to me - I’m made economically whole. With a BMW plug-in hybrid, I did not do a One Pay because the residual is historically overstated. Thus, if the car is totaled or stolen with a lease end residual of say $27K and the car is only worth $30K mid-way through the lease, I could lose much of my pre-paid lease $ with a One Pay. The logic may be flawed - but that is how I approach it.

20

Total 2-Year Lease Cost for my Tacoma was $9,770 but with one-pay it’s $7,916, which was $1,854 less. So. I made $1,854 on a $7,916 no-risk investment which is 23%.