ONE pay leases, gap insurance question

On vehicles with high mfs, can you do a one pay lease with gap insurance to get rid of the interest charge? Pros cons if so? Thanks!

Even on a one pay, you still pay rent (interest) in the lease. It’s discounted, but maybe not by a lot. Remember the residual is financed for the whole term.

Some leases have gap insurance included, some don’t. If you did a one pay, you’ll probably never need it.

You might want to look at multiple security deposits instead of a one pay. We’d need an example to look at.

If the car was totaled on a one-pay lease, does that mean your entire payment is forfeit?

In my experience, my friend got a refund on his c43, but I have had customers who lost everything they paid.

Did GAP insurance reimburse your friend? My understanding is they pay the remaining lease payments, of which there are none in a one-pay scenario.

My understanding is that insurance pays the value of the car (minus your deductible). The leasing company gets the buyout amount, and you’d get the rest. So you take a hit for however much the car had depreciated since you drove it off the lot. Really you’re in the same position as you would have been if you had bought the car with cash.

GAP insurance wouldn’t help, because it just covers the difference for the leasing/loan company if the car is worth less than you owe. New car replacement coverage might though.

Guys, this has been discussed as nauseam around here.

If you do a search, I wrote a long explanation how a one pay is handled by at least Audi and Mercedes-Benz. I’d guess the other manufacturers that offer a one pay option treat a total loss the same/similar.

Gap insurance doesn’t matter.


Let’s say you lease a car with an MSRP of $33K for 36 months. You negotiate the price to $30K and the residual is $20K. The payments would have been $320 if leased normally with $0 down, but you do a one pay and the payments are reduced to $300. So you pay 36 x $300 = $10,800 + the same license and documentation fees you would have normally. Now you’ve got a $20K balance waiting for you in 3 years just like you would on a normal lease- turn it in, sell it, trade it, buy it. Basically $20K has been financed for 3 years.

Let’s say the car is totaled in 6 months, and the insurance company says the market value is $27K, so they pay that (ignore the deductible- that’s the nature of insurance and there no matter what if you have to pay it). Scenarios:

  • you put $0 down and the payoff is $28K. The insurance pays $27K and you pay $1K. If you had GAP insurance, you pay $0. If the insurance pays less, you pay more unless you have GAP insurance.
  • you put $5K down and the payoff is $23K (it will actually be higher). The insurance pays $23K to the lender and $4K to you. You’re out the $1K, and GAP insurance won’t help you, because there’s no gap between $27K and a $28K payoff. If the insurance pays $26K, you lose $1K more.

Putting money down increases the risk of losing some/all of it, even if there’s GAP insurance. If the payoff isn’t higher because you put less/nothing down, there’s less for the GAP insurance to cover.

If you did a one pay and the insurance pays less than $28K, that money is lost. GAP won’t help.

This looks like the same thing Indy499 said.

At least with Audi and Mercedes-Benz, a one pay lease is not “money down” (ie. cap cost reduction).

In the event of a total loss, the unearned rent and depreciation are returned (pro-rata) to the lessee. The lessee loses the unearned paid tax. My guess is acquisition fees and such are considered fully earned and paid up front, but I’m not sure.

In the second example with the 5k down. How is there no gap between 27 and 28k. Why would GAP insurance cover that?

@miken - Yeah- I could see how a lender could return the unearned payment portion of a one pay lease if the car was stolen or totaled. That would make sense. I’ve never looked at the verbiage on a one pay. They’re extremely rare in my experience.

@JamesBond - there’s no gap between a $27K insurance payout and a $28K payoff because the payoff is $23K.The gap from $27K and $28K is the lessee’s loss- like you were saying. Money lost because down payment that wasn’t recovered.

Oh I get what you are saying.

Sorry for opening up this old thread

Looking to lease a BMW i3, One pay option is looking to at about 4k. I’ll be saving about $700 if i choose the one-pay route. Should I do it?

Also how would the gap work if I did the one pay for $4K? Lets say it gets totaled 26 months into the 36 month lease, do I just get a check for 10/36 of what I paid upfront? I was reading something on quora and it was getting to complicated

ONE pay leases, gap insurance question looks like the most plausible explanation.

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GAP has nothing to do with one-pay.