Nowadays, nearly 30% of all drivers in the United States lease their vehicles. This can help people ensure that they have a new, working vehicle in their driveway at all times.
Leasing a vehicle helps people who cannot afford to pay the full fee of a car upfront get a new car. This means that they can have the car as soon as they need it, and instead pay a fee every month in order to lease it from a provider.
This is much easier for many people, however, it can make accidents and incidents a little trickier to handle, as you may be wondering who is financially responsible for the vehicle if there are problems on the road.
What is a leased vehicle?
Generally speaking, a leased vehicle is basically a long-term car rental. When you lease a vehicle, you will have to make monthly payments in exchange for use of the car for a set amount of time.
Once the leasing period is up, you will have to return the car to the provider, or you will have the option to pay off the existing balance in order to purchase the car for yourself.
If you do not choose to do this, when you do not automatically own the car at the end of the lease period. Leasing a car simply means you pay monthly fees in order to use the vehicle for a certain period of time.
However, if you own a car and have an accident, then you can cover the cost of repairs yourself or go through your insurance. If you total a leased car, then the steps are a little different.
What is totaling a car?
If you total a car, it usually means that it is damaged beyond repair, or the cost to repair the vehicle is much higher than the cost of the vehicle itself, and will therefore be pointless to repair.
What happens if you total a leased car?
If you are in an accident with another driver, then you will have to gather the relevant information in order to report the accident to the police, and to your insurance company.
When in a car accident, you must always ensure that everyone involved is safe or not injured. Once this is done, you should also make sure that you are safe from any other harm, and away from the road. Then you must collect information from other parties involved in the accident, for insurance purposes.
This should be their full name, contact details, insurance details, registration number, details of the vehicle such as model and make of the car, and details of the accident and how it happened.
Regardless of whether you were at fault for the damage of the vehicle or not, you will need to notify the car provider straight away, and your insurance provider.
The next step then is to take the car to an auto repair shop. The body shop should then consider the damages to your vehicle. If the cost of the repairs will cost much more than 65% of the total value of the car, then the repair shop and insurance company will most likely declare the vehicle a total loss, or totaled.
If you are found not at fault, then the other driver or drivers’ insurance should cover the cost of the damages. However, if the car is completely totaled or is considered a total loss, then you may have to still pay any outstanding finance that is owed on the vehicle.
You will have to provide your vehicle lease company with details of the ‘total loss’ of the vehicle at the earliest possible opportunity in order to update your lease agreement. You will also have to pay the whole sum of money owed before you will be able to take out a new lease.
Unfortunately, if you have totaled a leased car without the proper coverage you will have to pay the total fee of the vehicle to the leasing company, even though you will no longer have the car anymore.
This however can be avoided if you have a GAP insurance policy, which should settle the outstanding figure for you in the event of totalling your leased vehicle. Gap coverage can help massively in this situation, as some people cannot afford to pay off the existing sum for the leased car after being in a crash. Gap coverage will do this for you, which is why the majority of leasing companies will require you to have it before leasing.
What do I need to do if I lease a vehicle?
If you lease a vehicle, there are a few things you should do in order to protect yourself and the vehicle. For example, it is paramount that you have the insurance coverage that you need in order to be safe and protected in the case of an accident.
You will need to ensure that you have the correct coverage that complies with the particular terms and conditions of your lease agreement, and any collision and comprehensive coverage that you need in case of a crash in your leased vehicle.
It is also highly important that you have Gap coverage for your leased vehicle in case the car is completely totaled. This means that you will not be expected to cover the final cost of the vehicle should it be damaged beyond repair in an accident.
In addition, you should always strive to drive responsibly, and pay full attention to the road at all times. However, accidents can happen, and they can often not be your fault.
If you do total your leased car make sure you inform the provider and insurance company as soon as possible to update your payments and agreements properly. This will ensure that you are not charged anymore money, or expected to cover the costs yourself.
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