Car-leasing offers you the luxury of driving a new car for a lesser payment. So, many people are attracted towards this alternative. But in practice leasing a car is full of many pit falls if you are not alert. Using the weaknesses of the leasing regulation many dealers may trick you into their traps. You will end up in a financial burden, thinking it is a good deal.
Here are some common scams. Please look at them before you lease a car.
So called rates of Low interest
Dealers show much higher interests as a lower interest rate in two ways. One is to show the money factor as the rate of interest and the second is holding back some security deposit or closing fee, without showing it in calculation.
Actually the money factor is expressed as a four digit decimal. But dealers show it as a percentage. For example money factor of 0.003 is shown as 3%, but it is actually equal to some 7.2% interest rate in calculation.
Learn the formula used by your dealer to calculate their interest rates. Get in to an agreement only if you understand the formula and satisfied with it.
Low early termination penalty
This is an all-time favorite trap for dealers. They say that you need to pay an early termination fee of only $300. By saying this they are talking about the administrative penalty but, there is a much stiffer undisclosed penalty called early termination fee which may cost you some thousands of dollars. Getting a written statement of exact payment required for an early termination will help you to avoid this trap.
An unwanted extended warranty
One more way of increasing the dealer’s profit is to slide an extended-warranty into the deal though it is already included in the monthly payments or to trick you into having a 48-month warranty on a 36-month lease. You should understand that you need not pay extra money for a warranty already included into your payments.
No security deposit
There is nothing as no security deposit in practice. It is only hidden under some other name such as disposition fees etc.
Here are some common scams. Please look at them before you lease a car.
So called rates of Low interest
Dealers show much higher interests as a lower interest rate in two ways. One is to show the money factor as the rate of interest and the second is holding back some security deposit or closing fee, without showing it in calculation.
Actually the money factor is expressed as a four digit decimal. But dealers show it as a percentage. For example money factor of 0.003 is shown as 3%, but it is actually equal to some 7.2% interest rate in calculation.
Learn the formula used by your dealer to calculate their interest rates. Get in to an agreement only if you understand the formula and satisfied with it.
Low early termination penalty
This is an all-time favorite trap for dealers. They say that you need to pay an early termination fee of only $300. By saying this they are talking about the administrative penalty but, there is a much stiffer undisclosed penalty called early termination fee which may cost you some thousands of dollars. Getting a written statement of exact payment required for an early termination will help you to avoid this trap.
An unwanted extended warranty
One more way of increasing the dealer’s profit is to slide an extended-warranty into the deal though it is already included in the monthly payments or to trick you into having a 48-month warranty on a 36-month lease. You should understand that you need not pay extra money for a warranty already included into your payments.
No security deposit
There is nothing as no security deposit in practice. It is only hidden under some other name such as disposition fees etc.
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