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Many people are finding car leasing much easier and much more efficient then buying these days. It gives the option to change vehicles and drive new cars without paying full price for it. The truth is that the option of leasing has many faults for the average Joe. The leasing laws do not require as many documents as with the purchase of a new vehicle so it is easier for the leaser to run scams on the average buyer.
There are many scams that are fooling the average car buyer here are a few to help you identify them.
Lower Rates:
Some dealers use the interest rate to fool unknowing buyers. They use a lower rate instead of the real rate which turns out to be much higher. They can do this because they give you the money factor instead of the actual interest rate or they add up the loan without some of the additional closing costs.
Money Factor:
In the money factor they will use a four digit number such as 0.005 and claim it to be the interest rate. They will say this is a 4% interest rate when in order to get the interest rate of the overall loan you need to multiply it by twenty-four. This could leave out a large substantial amount you will need to pay back, leaving the new buyer unknowing. The interest rate would in turn much higher over 9.6%.
In fact learning to do the numbers on your own would be the most helpful so mistakes like this do not sneak up on you in the future. Find out the formula they use and if you can't get the numbers yourself then you will need to ask more questions before signing anything.
Early Lease Termination:
Many will tell you that you can terminate the lease early and only suffer a low penalty. This is a scam! The scam is “You ask the dealer what you will pay if you terminate early and he says you will only pay a $300 penalty" This is just the administration fees for terminating the lease early. What they don't tell you is you are liable for all fee of termination including the one on the contract “in fine print of course" stating you will have to pay what is called an Early Termination Fee. This fee is well into the thousands.
This is an easily missed and easily owed fee. They will trick you with the “Early Termination Administrative fee" and bill you for both. This can be avoided by viewing the contract completely and reading all the fine print carefully. If you do not understand it and they will not give you an answer to your questions. . . . do not sign!
Extended Warranties:
Many dealers use this tactic as a means to raise their profit and your cost! They will sell you extended warranties that are not needed. If you are a new buyer then you will believe their double talk. They will tell you for a bit more they will give you an extended warranty that is already included in your monthly payments. He will tell you that he can give you a 36 month warranty for your 24 month lease.
Don't let them fool you into buying something that is already covered in you agreement. Read all the details of your agreement carefully.
Security Deposit:
Many dealers will tell you there is $0 security deposit. However they are not being truthful with you.
The security deposit if already factored in under “Provision for Disposition fees" so if they tell you otherwise you should find another dealer!
Darren Williger is an over-caffeinated, non-smoking, car buying, low carbohydrate eating, wine making enthusiast who writes for Cargoyle.com , MotorMaven.com , and MixtureCars.com .
