Lease buyout is the process through which an insurance company pays you for your car if it is in a total loss accident. Through this, you can purchase any vehicle at any time in the future. You must know these things before opting for a lease buyout!
1. The cost of fixing the damaged vehicle must be more than its value at the time of damage. The vehicle's value at that time will be decided by the state government's department of motor vehicles, where the ownership papers &'' registration are registered with.
2. The accident must be reported. If you cover up the accident and inform your insurance company, they will not pay for the buyout. However, if a case of hit and run is usually reported by the police department, it might be covered under the policy. Even if you report after some time, it may still be covered if there was no fault on your part or no intention to hide facts from the insurer.
3. There should be no loan on the vehicle (if applicable). Sometimes cars are financed &'' hence 3rd party companies like VW credit pay for leased vehicles at the time of damage/total loss. In such cases lease, the buyout amount will go to VW credit and not to the vehicle's original owner.
4. If the vehicle is purchased within the last 6 months before the damage, there is no buyout (unless you pay an increased rate for this privilege-which most insurers do).
5. You must receive a letter from your insurance company that they are writing off the vehicle. This usually happens when the total loss is more than its book value or market value at that time; in some cases, even if it's less than its market value, they may still write off the car &'' hand it back to you without payment. Still, usually, they'll offer a buyout.
6. This document can be submitted if you want to sell/lease out your car again and need proof of previous accident history Then repairs done by you should be done to the original damaged part to preserve your ownership rights.
7. You need a complete estimate from a garage for the repair of the vehicle. Only then will you get an idea of what extent of damage was caused and the cost related to it. In some cases, insurance companies ask the owner/purchaser of the car for all expenses related to damage and loss along with their assessed value (you can protest this by informing them that you're not going to pay twice, i.e., regular depreciation &'' expenses incurred due to accident).
8. There might be regular depreciation even before the incident happened. Still, regular depreciation is calculated based on mileage and time since the last repair. In contrast, accident repairs are paid upon assessment after repair of damaged parts.
9. If your vehicle was stolen and found by police, the insurance company might not pay you for its buyout since it is still considered as theft; no matter if you have proof of ownership to show &'' state government's department of motor vehicles has marked off records as "missing" or "stolen."
10. If your car is insured, then there should be money in the bank account associated with an insurance company that will use to pay for repairs or its buyout. Hire a lawyer if you still face troubles getting money from them after giving all required documents &'' completing an assessment of damaged parts.
11. If you have all the required documents &'' proof of insurance claim, it's legally binding for the court to take your case seriously. If more than one party is responsible for causing damage due to negligence, they all should be chargeable equally under applicable laws.
12. Also, check with your finance company if they will pay for damages or not since some finance companies might charge a penalty on early termination of the contract by the owner/purchaser.
13. You can also trade in a damaged car with a friendly garage at a lower price but only after repairing the same through its book value. Again, ensure that previous accident history or loss is not mentioned anywhere, with repaired parts intact and emissions standards upheld.
14. Always engage in conversation with the insurance company's agent, their manager, and his manager directly. Never take anyone else's word for granted, so it is best to put all correspondence in writing before you proceed further since these are serious issues that have the potentials of spoiling your future prospects if not appropriately handled. If you are buying a car from someone who already owns one, then ask them to ensure both cars, along with separate extra coverage, since you never know what exactly happened at the time of the accident.
15. Also, check with the bank &'' finance company before finalizing the sale price or agreeing on the amount as damages. Some finance companies might also charge a penalty on early termination of the contract by the owner/purchaser.
16. Lastly, a proper Bank Guarantee in Bank's name is usually prepared before handing over the car to avoid legal disputes in the future. The bank or financial institution will conduct an inspection before releasing payment to both parties &'' then comes the money into the account from the insurance company if damages come out positive during the assessment.
17. Also, check with RTO again in both your name &'' seller's to make sure that vehicle ownership has been transferred in favor of you or not. This is extremely important because it will prevent another individual from claiming damages in the future. If everything is clear, then you are good to go ahead with buying a damaged car!
Hope you find this helpful article... :)