We must be careful when going to use the services of leasing, there are some tricks that dealers should know that we are not fooled by a rogue dealer.
Too often when it comes to auto-leasing, people are so fascinated by the myriad of terms and jargon thrown their way that they ultimately pay through the nose, relying on the help of dealers rather than their own decisions based on their information.
Here is a look at some of the tricks dealers use to earn their profits and leave the customer to pay hundreds of dollars more than the actual value of the deal.
Trick 1: Leasing always a better deal than buying
Dealers use the lure of lower monthly payments to entice customers to sign long-term loans with maturities stretching for five years or more, make the payments even lower. There are two catches with such long contracts: higher mileage, exceeding the set limit, and hefty repair costs. By charging rents average 10 to 20 cents for every extra mile with the amount agreed in the contract, and warranties only covering three years, you leave yourself wide open for a hefty fee for excess mileage and wear and tear.
Trick 2: Cheap 2-3% APR rate on your lease
Dealer does not quote the interest rate you will pay your rent, he is not giving you factor in rent. While similar to the interest rate and is important in determining your monthly payments, a more accurate rate is calculated by multiplying the money factor by 24. For example, For example a cheap "3% money factor 24 X 0.003 = 7.2%. It gives you a better sense of what your annual interest rate on your rental contract.
Trick 3: Stress-free early lease termination
Dealers know consumer driving needs change and they want to have the option to exit the lease commitment sometime down the road, before their lease expires. The truth of the matter is, when you sign up for rent, you are effectively saddled with monthly payments for the remaining term of the lease and there is little choice for an early exit. Lease carry financial penalties are hefty fine for default on monthly payments or terminate 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.
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