Dealer Leasing Tricks

Too often when it comes to auto-leasing, people get so dazzled by the


myriad terms and the jargon thrown their way that they end-up paying


through the nose, relying on a dealer’s “help” than their own informed


decision.




Here is a look at some of the tricks dealers use to pad their profits and


leave the customers shelling hundreds of dollars more than the deal should


be worth.




Trick 1: Leasing always a better deal than buying




Dealers use the lure of lower-monthly payments to entice customers to sign


for long-term loans, with terms stretching for five years or more, making


the payments even lower. There are two catches with such lengthy contracts:


higher mileage, exceeding the prescribed limit, and hefty repair costs.


With


leases charging on average 10 to 20 cents a mile for any extra mile over


the agreed amount in the contract, and warranties only covering three


years, you leave yourself wide open for hefty charges for excessive


mileage and wear and tear.




Trick 2: Cheap 2-3% APR rate on your lease




The dealer is not quoting the interest rate you would be paying on your


lease; he’s rather giving you the lease money factor. Whilst similar to an


interest rate and important in determining your monthly payment, a more


accurate rate is calculated by multiplying the money factor by 24. For


example a “cheap” 3% money factor is 24 X 0.003 = 7.2%. This gives you a


better sense of what your annual interest rate on your lease contract is.




Trick 3: Stress-free early lease termination




Dealers know consumer driving needs change and they would like to have the


option of getting out of a lease commitment sometime down the road, before


their lease ends. Truth of the matter is, when you sign for a lease, you


are effectively saddled with monthly payments for the remainder of the


lease term and there is little-choice of getting out early. Lease contracts


carry hefty financial penalties for either defaulting on monthly payments


or terminating the lease earlier than the scheduled term.




To avoid being on the receiving end of such tried-and-true tricks, educate


yourself about leasing. Get down to the nitty-gritty and understand what


the leasing terms used by dealers mean. Crunch the numbers along with him


and understand how they arrived at the monthly payment figure. Don’t sign


anything until you’ve understood all the terms and your numbers much those


of the dealer. Do not let the dealer pressure you into signing; you are the


one to determine whether the agreement is right for you.