[collectstuffnj]

just bought my 23 G80 CX and after reading your story I'm glad I got the replacement value coverage (Gap Ins) from Progressive.

[Zamorskii]

I don’t think a blanket statement that one would lose a down payment in an event of total loss is entirely accurate. A better way of thinking about it is that your down payment and not GAP insurance would be covering the dimished vehicle value, but you also have to keep in mind that GAP comes with limits too (135% of the vehicle’s market value, if I am not mistaken).

So, for example, if you buy a 7-series for $150k and in 1 year put 30k miles on it making it worth $70k (totally made up numbers), your gap would only pay $24.5k on top of the $70k from your main insurance, so if you still owe $130k on it, you’ll end up quite a bit short.

[Aalfred]

Originally Posted by utsavized

The thing is that it is the cash value of the car at the time it was totaled, not the cash value you paid for the car at the time of purchase.

In the current market, things have changed, so these two could be the same amount, or your payout even higher than what you paid for. I bought my 2021 G80 for 83K, drove for two years and traded it in for ~75k. Could have probably sold it private party for closer to 80k (I know my dealer flipped it around in 2 days for 85k). My payoff was only 62k. So, had my car been totaled, I would have gotten more money back.



This is generally the case, not an absolute. Cars depreciate heavily in the first three years, esp. ones that fall in the luxury/performance bracket that are expensive to maintain after the initial warranty runs out. My 2018 X5M had a sticker price of 140k, in three years, it was worth 70k. Same with my 2015 M6.

So, let's say a car is worth 100k, you put 10k down and take a loan out for the remaining 90k. You drive the car for 1 year and have paid off another 10k of the loan via monthly payments. The car gets totaled and is valued at 75k (this would not be surprising in a normal scenario where market isn't crazy). You would still owe 5k more to the bank. The gap insurance will cover that. But what about the 10k you put down?

Essentially, your monthly payment that was supposed to be 1k/mo now effectively doubles to 2k/month for your ownership period of 1 year because you didn't get to amortize that 10k over the lifetime of your loan/car. As opposed to that, if you had skipped that 10k down, you would have paid around 300 dollars more a month (~30 dollars month / 1000 dollars of loan), so your effective monthly payment for that 1 year before your car got totaled would have been 1300 instead of 2k.

But then again, this is probably just a lot of finance OCD that not many people care about. Heck, I have probably put another 20k in parts on my car and if it gets totaled, I am not getting any of that back. So, my advice itself a bit hypocritical here. Just wanted to share that in typical scenario, you could lose your down payment, so if monthly payment does not matter, interest is low, you have gap insurance and a heavily depreciating car, it's better to put 0 down and invest that money elsewhere (or spend it in parts and end up in the same situation lol).




The current market is a total outlier. Cars like G8x are holding their value strong and interest rates are nuts. Contrary to everything I have just said, it may actually make more sense to make a down payment in the current market

I think the key here is interest rates and your ability to pay what you owe if your car gets totalled. Money down is always a good financial option esp in the setting of high interest rates and stocks in the bear market. At the end of the day, cars depreciate and either your down payment covers the cost of the depreciation or your GAP (with some limits) covers them. Most cars, the GAP only covers what you OWE to the lender rather than what the car is worth.

So if you buy a 100K car and you put 50K down, and its totaled in 2 yrs and is worth 75K, your GAP wont kick in anyways. So skip the GAP. You will still make 25K of ur downpayment back. If you put 10K down and the car is worth 75K, you might OWE 85K on the car and the GAP covers the 10K but now you have to add in your interests you paid and the extra monthly payments and the cost of GAP coverage. Now if your car isnt totalled and you have a 60 or 72 month loan, you are certainly overpaying way more in this current interest rates and not a sound decision. No one wants to buy a car hoping its totaled but if it happens, gap or no gap, small or large downpayment, you are bound to lose money unless it happens towards the tail end when you might make more than what you owe if you have a good downpayment. In the end, no one said cars were appreciating assets

[wazzza]

Originally Posted by Aalfred

I think the key here is interest rates and your ability to pay what you owe if your car gets totalled. Money down is always a good financial option esp in the setting of high interest rates and stocks in the bear market. At the end of the day, cars depreciate and either your down payment covers the cost of the depreciation or your GAP (with some limits) covers them. Most cars, the GAP only covers what you OWE to the lender rather than what the car is worth.

So if you buy a 100K car and you put 50K down, and its totaled in 2 yrs and is worth 75K, your GAP wont kick in anyways. So skip the GAP. You will still make 25K of ur downpayment back. If you put 10K down and the car is worth 75K, you might OWE 85K on the car and the GAP covers the 10K but now you have to add in your interests you paid and the extra monthly payments and the cost of GAP coverage. Now if your car isnt totalled and you have a 60 or 72 month loan, you are certainly overpaying way more in this current interest rates and not a sound decision. No one wants to buy a car hoping its totaled but if it happens, gap or no gap, small or large downpayment, you are bound to lose money unless it happens towards the tail end when you might make more than what you owe if you have a good downpayment. In the end, no one said cars were appreciating assets

Truth. In the end, it usually points to a bad financial decision. So, just enjoy the car

Sorry OP, thread got little hijacked because of the down vs no down conversation. Glad everything is sorted out for you!

[2011ninja]

Originally Posted by utsavized

Laws may vary by state but generally, if a car is totaled, insurance pays the cash value of the vehicle that is totaled. In most cases, value of vehicle is lower than what is owed on the loan.

Gap insurance covers that difference.

By paying down payment, you lower the amount you pay interest on, but in case the car is totaled and gap coverage kicks in, they would have to pay lower for gap because your down payment actually lowered the total loan amount.

It doesn’t make sense to pay down payment unless you really want you payment lowered or in situations where internet rates are really high. But generally, loan rates are low and there aren’t much upsides to putting money down.

But then, you could also argue how often does a car get totaled in one’s lifetime? So it’s not that it’s a super risky thing to do. People do it all the time. It’s just that if such a situation arises, down payment is usually gone.

In case of 50k down, you wouldn’t lose everything, esp if your vehicle is worth more than that. Basically the equation is value of the car vs. What you owe the bank.

Originally Posted by Mark Kez

You’re worse than my English major PhD wife!! Good catch!!

Lol! Good one 🤣

Ya gotta remember this is the internet.

You’re sharing internet space with someone living in a basement eating corn chips sipping an extra large Diet Coke.

['Cane]

Originally Posted by 2011ninja

Lol! Good one 🤣

Ya gotta remember this is the internet.

You’re sharing internet space with someone living in a basement eating corn chips sipping an extra large Diet Coke.

Hey now!



I don’t like Diet Coke.

[2011ninja]

Originally Posted by 'Cane

Hey now!



I don’t like Diet Coke.

Glad you have a sense of humor 🤣

[Humdizzle]

this is why i use specialty insurance where the cars value is agreed on. i know exactly how much i will get if my m2c or gt3 get totaled.

buying used or a special edition future collectible car like a m5cs or m2cs also helps as these are pretty stable investments.

buying a brand new M car thats not a special edition... its going to dip in value and insurance isn't going to pay out what YOU paid.

you can put zero down on a loan, but then you are giving the bank tons of free money in interest. screw that.

[wazzza]

[QUOTE=Humdizzle;30047632]you can put zero down on a loan, but then you are giving the bank tons of free money in interest. screw that.

Well, interest used to be .9% so it would make more sense to give that to the bank and invest the down payment somewhere else to get much better returns. But right now, yeah… times have changed.

[xShadows]

Originally Posted by Mark Kez

The end is near and I’ve learned a lot about insurance and valuing your dream car every damn day you can.

I waited seven months for my G83 only to have it totaled seven months later by a careless driver. It’s taken me three months, two lawyers and an independent appraiser to finally get a settlement that was fair from my insurance company. In NY state where our loss property laws aren’t very good I got lucky because I knew the value of my car and didn’t accept the 1st, 2nd or 3rd offer from my insurance company. Three college degrees finally paid off!!

I’ve learned that when you put money down on any car you are taking a huge risk, here in NY state that money is gone forever if your car is totaled. Don’t purchase warranties in advance and fold that money into your monthly payment, only the extended warranty contract is refundable, all others you’re out that money. Finally and most importantly, value every damn day in your car! I’ve been driving various rental cars for three months, a Chevy and now a Kia Soul. Trust me, neither of them are a BMW, or an M car and certainly not a convertible with over 500hp and torque that’ll pull you out of anything. Forget the money I lost, I miss driving my car, an M car and the only thought that keeps me from going insane is that fact that my new one is sitting at the port, hopefully making it onto the Grand Pavo on Wednesday. Life is one big learning experience and is the best teacher, so take what you will from my experience, but do yourselves a favor and cherish every damn day in your cars, they really are the Ultimate Driving Machines!!

You need pot hole insurance living in Syracuse. Glad I don't live there anymore, but kind of excited to come back in July for the Nationals.

[Mark Kez]

Originally Posted by xShadows

You need pot hole insurance living in Syracuse. Glad I don't live there anymore, but kind of excited to come back in July for the Nationals.

Message me when you’re in town and we’ll go for a drive!

[xShadows]

Originally Posted by Mark Kez

Message me when you’re in town and we’ll go for a drive!

Have to make sure I hit up Darrell too!

[Mark Kez]

party0030:

Originally Posted by xShadows

Have to make sure I hit up Darrell too!

[phefner]

Insurance sucks…Deny, Delay, Defend.

With these high performance and desirable cars, you need either an Agreed Upon Value policy, or something like New Car Replacement to have a chance. Even then it’s no guarantee.

Just finish my ordeal with a 2020 GT4. I got a fair value on the total, which was more than I paid due to market circumstances. But the New Car Replacement was a fight due to the ADMs. Couldn’t get the gap fillled to cover the full ADM needed to secure an available allocation. Another dealer in the area undercut the ADM in the viable order I had, then wouldn’t commission the order because they had too many others on there list. I’d like to do a Used Cars remark on their lot.

As much as I loved my GT4, an M3 was always on the list. Fortunately I found one in a spec I liked. That’s how I ended up in an F80 M3 6MT. Not a GT4, different, but capable and surprisingly fun...

Good to see your ordeal has ended too.

[BryanCO]

Originally Posted by Mark Kez

You don’t recoup that money of your car is totaled.

Originally Posted by utsavized

Yup. That’s why, if you can, always 0 down.

Say, if you put 10k down and someone totals you as you roll out of the dealership, you may be able to get the loan paid off fully paid off and get a new car again… but you will never see that 10k you put down.

So yeah, don’t put anything down and make sure your insurance has gap coverage.

That’s not how any insurance I’ve ever have purchased works. And I’m not referring to agreed value. The car is worth some value - the day after it’s purchased or seven months later. Yes, this is a negotiation. If the negotiated value is greater than the lien (if there is one), the excess funds go to the insured. If the negotiated value is less than the lien (if there is one), the insured is responsible for the difference (hence gap insurance). A down payment has nothing to do with it other than a down down payment impacts the owed or lien amount. Deductibles impact the exact amounts and I’m not referring to a lease (OP didn’t mention a lease).

[BryanCO]

Originally Posted by utsavized

The thing is that it is the cash value of the car at the time it was totaled, not the cash value you paid for the car at the time of purchase.

In the current market, things have changed, so these two could be the same amount, or your payout even higher than what you paid for. I bought my 2021 G80 for 83K, drove for two years and traded it in for ~75k. Could have probably sold it private party for closer to 80k (I know my dealer flipped it around in 2 days for 85k). My payoff was only 62k. So, had my car been totaled, I would have gotten more money back.



This is generally the case, not an absolute. Cars depreciate heavily in the first three years, esp. ones that fall in the luxury/performance bracket that are expensive to maintain after the initial warranty runs out. My 2018 X5M had a sticker price of 140k, in three years, it was worth 70k. Same with my 2015 M6.

So, let's say a car is worth 100k, you put 10k down and take a loan out for the remaining 90k. You drive the car for 1 year and have paid off another 10k of the loan via monthly payments. The car gets totaled and is valued at 75k (this would not be surprising in a normal scenario where market isn't crazy). You would still owe 5k more to the bank. The gap insurance will cover that. But what about the 10k you put down?

Essentially, your monthly payment that was supposed to be 1k/mo now effectively doubles to 2k/month for your ownership period of 1 year because you didn't get to amortize that 10k over the lifetime of your loan/car. As opposed to that, if you had skipped that 10k down, you would have paid around 300 dollars more a month (~30 dollars month / 1000 dollars of loan), so your effective monthly payment for that 1 year before your car got totaled would have been 1300 instead of 2k.

But then again, this is probably just a lot of finance OCD that not many people care about. Heck, I have probably put another 20k in parts on my car and if it gets totaled, I am not getting any of that back. So, my advice itself a bit hypocritical here. Just wanted to share that in typical scenario, you could lose your down payment, so if monthly payment does not matter, interest is low, you have gap insurance and a heavily depreciating car, it's better to put 0 down and invest that money elsewhere (or spend it in parts and end up in the same situation lol).

Ya, no.

Zero down, maximum term, gap insurance and betting that the car is a total loss at some point during the term would minimize the cost of purchasing the car (assuming the vehicle has somewhat normal depreciation). Still has nothing to do with the down payment other than trying to minimize actual ownership costs).

Not a strategy I would use nor try to imply is logical or financially solid.

[BryanCO]

Originally Posted by Aalfred

I think the key here is interest rates and your ability to pay what you owe if your car gets totalled. Money down is always a good financial option esp in the setting of high interest rates and stocks in the bear market. At the end of the day, cars depreciate and either your down payment covers the cost of the depreciation or your GAP (with some limits) covers them. Most cars, the GAP only covers what you OWE to the lender rather than what the car is worth.

So if you buy a 100K car and you put 50K down, and its totaled in 2 yrs and is worth 75K, your GAP wont kick in anyways. So skip the GAP. You will still make 25K of ur downpayment back. If you put 10K down and the car is worth 75K, you might OWE 85K on the car and the GAP covers the 10K but now you have to add in your interests you paid and the extra monthly payments and the cost of GAP coverage. Now if your car isnt totalled and you have a 60 or 72 month loan, you are certainly overpaying way more in this current interest rates and not a sound decision. No one wants to buy a car hoping its totaled but if it happens, gap or no gap, small or large downpayment, you are bound to lose money unless it happens towards the tail end when you might make more than what you owe if you have a good downpayment. In the end, no one said cars were appreciating assets

Agree

[LuvMyE92]

First, OP glad you are OK and the issue is resolved. Congrats on the new car.

Second, this nonsense about the down payment has been largely dispelled now, thanks to you guys who clarified it. However, I would be remiss if I did not mention that this actually does apply with a lease: a BMW lease in the USA contains gap insurance, so you are covered for the balance owed. That is why you should never put down a down payment/cap cost reduction on a lease.

Financing is a different story, as discussed.

I've only had one total loss experience (E39 M5) and it was back in the day before all of these ridiculous market prices and common ADM and shortages.

But remember, boys and girls, in the end, it's just a car, and you can get another one.

[Juanero]

Glad your healthy. Hope the next car comes quickly!

If you put down a significant amount, there is no need for gap insurance. Gap insurance helps if you owe more than the car is valued, for example if the car depreciation is big.
But if your car gets totaled, you should have an adjuster to help you fight against the insurance (whether it is someone elses' or yours).
I got "lucky" once when I wanted to get out of a Mercedes--trade in was 10k under what was owed. Rolled that 10k into a loan for another car. That car got totaled and gap insurance ($600) wiped it all away.
A down payment LOOKS lost if your car gets totaled and the pay off is under he amount needed to get back into similar because of the depreciation--that is where you argue with insurance.

[DO444]

Originally Posted by Miciek

I can say the rental was one of the hardest parts too.
Brand new shiny green M4 missile, 3 weeks in hit and run.

Enterprise gave me a fucking Mitsubishi Mirage with 80HP.

Brutal!
You almost really need 2 cool cars now as the dealerships aren’t giving loaners for work completed in a day and you’re bound to have something in the shop from time to time.

Even if it’s just a mini or something you like.
Maybe I’m crazy idk.

I really hate driving crap though.

[M4CompConv/X7]

Originally Posted by Forzanerazzurri

Do you guys not have New Vehicle Protection clauses in your insurance policies in the US? I think I pay $100 bucks a year and if the car is totalled I get 100% of the purchase price back. That premium obviously goes up with depreciation but it's a must have and peace of mind for the first year or two when you have a car thats financed (especially with nothing down).

Some companies will pay you for what a new car costs... One model year NEWER!

[FCRMonty]

Crazy - if I total my car in the first 4 years of ownership, my insurer will pay the lowest of: 1) the actual purchase price; 2) manufacturer’s suggested retail price at the time of purchase; or 3) the cost of replacing my car with a new car of the same make or model (also includes taxes). Pretty standard coverage in Ontario.