Consumer complaint received 2023-05-04
Company: BMW Financial Services NA, LLC
State: NY
Product: Vehicle loan or lease
Sub-product: Lease
Issue: Getting a loan or lease
Sub-issue: Problem with additional add-on products or services purchased with the loan

Complaint:
I leased XXXX / XXXXXXXX XXXX XXXX on XX/XX/XXXX. The total lease agreement amount is {$45000.00} for 36 months. I made a payment of {$30000.00} at lease inception. And paid a monthly fee for 13 months, I paid a total of {$35000.00}, which would be a lease for 27 months, but I only got 13 months of service now. I hope BMW FS refunds me the overpayment of around {$18000.00} instead of the {$10000.00} Loyalty Payment Credit with the strict term BMWFS offered. BMWFS still refuse to return the money they overcharged. Also, I couldnt find the legal basis and faith of the Loyalty Payment Credit.

BMWFS told me they overcharged my prepaid money mainly reason is that the down payment is used to determine the monthly fee, and it can not be refunded. Which law or term of the lease agreement says the down payment is unrefunded when the lease agreement is terminated early? I know the down payment is not refunded when the lease ends after the lease term of 36 months, but now only the lease is 13 months. I also know the down payment is not refunded when people mortgage a house, but the overvalue will return to the people after the house auction. Now, BMW FS receives all the settlement money from the insurance, and the overvalue from payoff is {$21000.00}, double the {$10000.00} Loyalty Payment Credit which BMWFS offered.

Yes, its not a loan, it is a lease, the lease has two types : operating leases and financing leases ( capital leases ), ( Please see the XXXX XXXX about the lessee account. ) If its a capital lease, the lessee owns the vehicle, and BMW FS should refund me {$21000.00} instead of the {$10000.00} Loyalty Payment Credit with strict terms.

If its an operating lease, all the money lessee paid is for the use right of the vehicle, its no matter the down payment or others. BMW FS should return the overcharged money they didnt service, which is around {$18000.00}.

Also, BMWFS answered me, the down payment is for the calculation of the monthly payment. But BMW FS calculated the monthly payment based on the whole lease term of 36 months, now only about 13 months, the lease agreement is terminated. BMWFS should recalculate and refund me the overcharge base on the actual lease term, which is around {$18000.00}.

Below is BMW FSs letter, and my answers, also the same case settlement of BMW FS.

First, the down payment is used to determine monthly payment, and it can not be refunded.

-- -- Consumers should be informed clearly. I dont find any term in the lease agreement that mentions that BMW FS has the right to keep all the down payments when the leased vehicle is a total loss and the lease agreement is terminated. Also, which term of the lease agreement said the down payment can not be refunded? Otherwise, who wants to pay the huge {$30000.00} at lease inception?

Secondly, The down payment is used to determine your monthly payment.

-- -- The down payment is not only for calculating monthly payments but also payment for lease service. The BMW FS calculated the monthly payments based on 36 months of lease time. If the lease ends after 36 months, I wouldnt ask BMW FS to refund the down payment and tax I prepaid. But now, the lease agreement was terminated because of the vehicle 's total loss. The actual lease time is only about 13 months. So, there are 23 months left that BMWFS did not supply lease service but charged the money I paid at lease inception. BMW FS should return the down payment and tax for 23 months which didnt occur.

Also, By signing the Lease Agreement, you agreed to abide by the terms and conditions of financing.

-- -I signed the Lease Agreement, and I finished all liabilities of the lease agreement asked, but no term of the lease agreement said the down payment and prepaid money can not be refunded when the lease agreement is terminated. If the lease agreement has the term mentioned, please marked and tell me, if not, I now ask please to refund the money I paid in advance which I didnt get the service.

Upon review of your Lease Agreement, we confirm it is not a pre-paid agreement.

-- -- No people told me BMWFS has pre-paid agreement and what is the difference between this lease agreement and pre-paid agreement. Is it the reason BMW FS can over-change money? and which term in the lease agreement mentions the BMW FS can overcharge customer money? Which law requires?

As an operating lease, all the money lessees paid is for the right to use the vehicle and sales tax, one-time miscellaneous fees. The down payment nature is pre-paid for the use right of vehicles and decreases the lease liability. BMW FS should return the money the customer paid in advance for a service that the customer didnt get service. ( Please see the XXXX XXXX about the lessee account ) The Loyalty Payment Credit in the attached XXXX XXXX XXXX response dated XX/XX/XXXX, is a program BMW FS started XX/XX/XXXX. .. We are offering 50 % of the amount remaining after subtracting your payoff amount from the amount of any insurance settlement resulting from the total loss.

-- -If its a capital lease, BMWFS should return 100 % of the amount remaining after subtracting your payoff amount from the amount of any insurance settlement resulting from the total loss.

BMW FS should inform lessees they will only offer loyalty credit instead of the money return if the lease agreement is terminated early. Consumers should be informed clearly : what is the legal basis of this loyalty credit?

Since the program BMW FS started on XX/XX/XXXX, BMW FS should refund the money directly instead of loyalty credit if the lease began XX/XX/XXXX, earlier than XX/XX/XXXX, the day the loyalty credit started. 

This loyalty credit violates the rights and interests of consumers. In terms of the amount, the consumer should receive 100 % instead of 50 % of the amount remaining after subtracting your payoff amount from the amount of any insurance settlement resulting from the total loss. 50 % is unfair and it's not reasonable.

Lastly, BMW FS should give consumers a choice. How to use loyalty credit when the customers do not need or can not afford to lease a vehicle or finance a vehicle? And the loyalty credit offer sets strict money use and time limits. Converting the refund money which the customer deserves into loyalty credit is another disguised violation of consumers ' rights and interests. Please return the money directly as soon as possible.

However, you made a payment of {$30000.00} at lease inception, which included {$26000.00} for a down payment, {$2100.00} for sales tax on the down payment, and {$2400.00} for upfront sales tax on the remaining balance and miscellaneous fees.

-- -- -This time, I minus the one-time miscellaneous fees from the payment of {$30000.00} at lease inception when I calculate the refund money. Depending on the amount, the down payment of {$26000.00}, and sales tax of {$3400.00} is for 36 month 's lease. BMW FS should return the down payment and sales tax for 23 months which didnt occur, amount {$18000.00}. 
( ( {$26000.00} + {$3400.00} ) XXXX {$810.00}, $ XXXX {$18000.00} ) If its a capital lease, we use the payoff method, BMWFS should return 100 % of the amount remaining after subtracting your payoff amount from the amount of any insurance settlement resulting from the total loss, amount {$21000.00} ( $ XXXX ). 

Please contact me and refund the overcharged money of at least {$18000.00}. 

The link is a similar case for reference. https : XXXX. 
The attachment BMW settlement is the same case settlement. 


Please refund the money I deserve, and dont violate my customer rights again.

Company response to consumer: Closed with explanation