2 lease questions - Deposit size issues and Gap....
Discussion
I've searched back 10 pages to see if similar questions have been asked......
1) Is there any benefit to having a smaller initial deposit over a larger one?
I'm due my new car on Friday (X3) and am on a 3+35 deal, but could change to a 12+35 to reduce the monthly payments. Now I've got a good chunk of cash in my account from having sold my own car yesterday, I'd like to do this, but am told that if the car were to get stolen next week or written off, your contract ends and that's it. So I'd stand to lose 12 months deposit instead of 3 months.
With the total cost of the lease being unchanged whether you put in 3 or 12 months up front....what advantage is there to putting in a bigger deposit?
2) Do I need GAP insurance on a lease car? And would it have any bearing on question 1? As in, would GAP cover reimburse my "lost" deposit if I write the new car off within a month?
1) Is there any benefit to having a smaller initial deposit over a larger one?
I'm due my new car on Friday (X3) and am on a 3+35 deal, but could change to a 12+35 to reduce the monthly payments. Now I've got a good chunk of cash in my account from having sold my own car yesterday, I'd like to do this, but am told that if the car were to get stolen next week or written off, your contract ends and that's it. So I'd stand to lose 12 months deposit instead of 3 months.
With the total cost of the lease being unchanged whether you put in 3 or 12 months up front....what advantage is there to putting in a bigger deposit?
2) Do I need GAP insurance on a lease car? And would it have any bearing on question 1? As in, would GAP cover reimburse my "lost" deposit if I write the new car off within a month?
To answer your questions:
1) Depends whether you want to have a lower monthly commitment, eg. if you're looking at something like a mortgage etc. It ties up a little more of your cash initially but nets out the same in the end. Re. a write off, that leads into point...
...2) Yes, for the money GAP insurance is a bit of a no-brainer. Mine covers the initial rental (up to a certain amount - check your quote/policy). The insurer will pay whatever they pay, the GAP insurance will cover whatever the shortfall is to the leasing co. and then they'll reimburse me the initial rental.
You're right in that if you don't have GAP and the car's written off in the first year then it's possible that the insurance may not cover the full reimbursement of the vehicle to the lease co. AND put you right with your initial rental.
I went with ALA on my BMW. 2 year term, £118 total. GAP up to £50k shortfall cover, £500 excess cover, up to £3k initial rental cover. As I say, for £59/yr it was a simple decision to go with it.
1) Depends whether you want to have a lower monthly commitment, eg. if you're looking at something like a mortgage etc. It ties up a little more of your cash initially but nets out the same in the end. Re. a write off, that leads into point...
...2) Yes, for the money GAP insurance is a bit of a no-brainer. Mine covers the initial rental (up to a certain amount - check your quote/policy). The insurer will pay whatever they pay, the GAP insurance will cover whatever the shortfall is to the leasing co. and then they'll reimburse me the initial rental.
You're right in that if you don't have GAP and the car's written off in the first year then it's possible that the insurance may not cover the full reimbursement of the vehicle to the lease co. AND put you right with your initial rental.
I went with ALA on my BMW. 2 year term, £118 total. GAP up to £50k shortfall cover, £500 excess cover, up to £3k initial rental cover. As I say, for £59/yr it was a simple decision to go with it.
There's no benefit as such to larger/smaller initials. Generally the total cost over the 3 year term (or however long) will be the same no matter how you slice it up. It just depends on your attitude to risk really.
Some people will tell you it's better to keep your large initial and invest it somewhere so it's earning you money and you pay the bigger monthlies. At the end of the term you'll have paid the same but possibly made some extra off the investment interest. There's also the issue of if you write the car off early on in the agreement, you lose that big initial payment.
This is where any Gap cover you look at should include (or be able to add) Initial Payment Cover or something similar to mitigate the risk.
Personally I much prefer having lower monthlies and have usually always done 9+ or 12+ deals. It's generally less than £3k up front, so it's not like complete destitution money if you do happen to lose it, and it's questionable how much of a return you could really get on a diminishing £3k over 2 years. It's also beneficial if you want to end the lease a few months early (say to avoid a costly service...) as you pay 50% of the remaining payments to exit, or if you want to extend your lease it could benefit you to be on lower monthlies.
We've got a Q5 just now that was due to end it's 2 year lease but they offered an extension for 6 months on the same payment. I put down £3,000 initial and the monthlies are £292 - the extension is £292 per month whereas if I'd gone with a 1+23 the payments would be £404 per month.
Swings and roundabouts, horses for courses, etc.
Some people will tell you it's better to keep your large initial and invest it somewhere so it's earning you money and you pay the bigger monthlies. At the end of the term you'll have paid the same but possibly made some extra off the investment interest. There's also the issue of if you write the car off early on in the agreement, you lose that big initial payment.
This is where any Gap cover you look at should include (or be able to add) Initial Payment Cover or something similar to mitigate the risk.
Personally I much prefer having lower monthlies and have usually always done 9+ or 12+ deals. It's generally less than £3k up front, so it's not like complete destitution money if you do happen to lose it, and it's questionable how much of a return you could really get on a diminishing £3k over 2 years. It's also beneficial if you want to end the lease a few months early (say to avoid a costly service...) as you pay 50% of the remaining payments to exit, or if you want to extend your lease it could benefit you to be on lower monthlies.
We've got a Q5 just now that was due to end it's 2 year lease but they offered an extension for 6 months on the same payment. I put down £3,000 initial and the monthlies are £292 - the extension is £292 per month whereas if I'd gone with a 1+23 the payments would be £404 per month.
Swings and roundabouts, horses for courses, etc.
Edited by ilikejam on Monday 20th September 13:41
Sorted.
Just took out an ALA policy covering the £47k X3 for 3 years with £3k of "Initial deposit" cover, for £179.
Happy with that.
Thanks to you all for your helpful contributions.
For other in same boat.....If you get a quote via Money Saving Expert and follow the link to ALA from their site, your quote is 10% less. Was in my case anyway.
Just took out an ALA policy covering the £47k X3 for 3 years with £3k of "Initial deposit" cover, for £179.
Happy with that.
Thanks to you all for your helpful contributions.
For other in same boat.....If you get a quote via Money Saving Expert and follow the link to ALA from their site, your quote is 10% less. Was in my case anyway.
Mr Noble said:
Sorted.
Just took out an ALA policy covering the £47k X3 for 3 years with £3k of "Initial deposit" cover, for £179.
Happy with that.
Thanks to you all for your helpful contributions.
For other in same boat.....If you get a quote via Money Saving Expert and follow the link to ALA from their site, your quote is 10% less. Was in my case anyway.
Bit late for you but there's a PistonHeads discount code, PISTON12, for 12% off. https://www.pistonheads.com/gassing/topic.asp?h=0&...Just took out an ALA policy covering the £47k X3 for 3 years with £3k of "Initial deposit" cover, for £179.
Happy with that.
Thanks to you all for your helpful contributions.
For other in same boat.....If you get a quote via Money Saving Expert and follow the link to ALA from their site, your quote is 10% less. Was in my case anyway.
I used discount code MSE25 for a 25% discount.
Mark83 said:
Bit late for you but there's a PistonHeads discount code, PISTON12, for 12% off. https://www.pistonheads.com/gassing/topic.asp?h=0&...
I used discount code MSE25 for a 25% discount.
This will come in handy soon, thanks!I used discount code MSE25 for a 25% discount.
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