Consumer complaint received 2023-08-01
Company: BMW Financial Services NA, LLC
State: MA
Product: Vehicle loan or lease
Sub-product: Lease
Issue: Problems at the end of the loan or lease
Sub-issue: Termination fees or other problem when ending the lease early

Complaint:
On XX/XX/2023, I was rear ended which resulted in a total loss of my leased BMW vehicle. The car was around {$61000.00} where I put {$14000.00} down along with a years worth of payments. At the time of the accident, the pay off amount for the leased vehicle was {$44000.00}. After the assessment was performed by my insurance company, it was determined the amount the car was worth was {$56000.00}. 

BMW Financial has stated since this was a total loss, the lease is terminated and they will be keeping the entire amount rather than paying the lease pay off then providing me the different which is around {$12000.00}. 

From my insurance company, to dealerships with me looking for a new car, to my lawyer, all stated they have never heard of this before and the logical outcome should be me being provided the balance after the lease payoff of {$44000.00} was taken out. 

My insurance agent as well as myself spoke with XXXX representatives from BMW financial on multiple occasions who verbalized the lease agreement does not explicitly state in the event of a total loss, BMW will keep the entirety of the pay off from the insurance company. 

Another agent agreed that the lease agreement " does not have the verbiage in the contract that would state the customer would not receive the remaining balance ''. 

This is a binding contract where an agreement was signed, but since the contract does not state this then BMW Financial can just take the money anyways? When signing the agreement, I was not warned of this potential outcome, nor is it in the lease agreement. 

How is it that this is okay? A giant company like BMW taking advantage of the customer because they are the small guy in the situation without the resources a company like BMW has. 

Please help me in getting some sort of settlement where i would get whatever money is left over after the lease was paid off. 

Their response to this from the XXXX 

We understand you are requesting a refund of the difference between the insurance settlement amount to be paid by XXXX and the amount you would have paid to purchase your leased vehicle. As servicer for the owner of the leased vehicle, and pursuant to the terms outlined in Section XXXX of your Motor Vehicle Lease Agreement ( Lease Agreement ), BMW Financial Services is listed as loss payee on the vehicles insurance policy. Under Section XXXX, the insurance company is required to settle with BMW Financial Services for the actual cash value of the vehicle at the time of loss. Your obligations under Section XXXX are limited to any past due payments, property taxes, any deductible, or other items deducted from the actual cash value of the vehicle by your insurance company. The Lease Agreement provides for a gap waiver if the actual cash price were less than the Adjusted Lease Balance ; however, as the owner of the leased vehicle, BMW Financial Services is entitled to the insurance proceeds in the event of a total loss. 

Once we received confirmation your insurance company determined the vehicle was a total loss, your Lease Agreement was terminated through the process outlined in Section XXXX, I agree to immediately notify you if the Vehicle is damaged or destroyed in an accident, stolen, abandoned, or taken by a police or other government agency. If any of the above events occur, you reserve the right to terminate this Lease. Once the Lease Agreement was terminated, the Purchase Option was no longer in effect. 

As stated in the enclosed correspondence sent to you on XX/XX/2023, in appreciation of your business and to aid you in obtaining your next vehicle, BMW Financial Services may be able to offer you a Loyalty Payment Credit on your next account. The Loyalty Payment Credit amount will be up to 50 % of the amount remaining after subtracting your contractual payoff from the insurance settlement resulting from the total loss. Your eligibility, and the amount of the Loyalty Payment Credit, will be determined upon receipt of the insurance settlement payment from your insurance company. The insurance settlement amount must be received, and your account must be closed with a {$0.00} balance, before the Loyalty Payment Credit can be applied to your new account. As of the date of this letter, we have not received the settlement payment from your insurance company.

Company response to consumer: Closed with explanation