Auto Leasing Scams
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Written by Chad Cook
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Wednesday, 07 June 2006 |
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Car-leasing has been lauded as a another attractive alternative to buying,
offering in the proceeding the flexibleness to push a new car for less. The
reality, regardless, is that leasing is a choice that is fraught by numerous
pitfalls for the standard buyer. Leasing regulation does not require as
much disclosure as buying a vehicle. This has given a great rise to many leasing
scams that scam the consumer into believing they are giving them a acceptable deal when, in effect, all he is getting is a rough deal on the dealers terms.
Let's look at some of these common scams and how to avoid them
Artificially low interest rates:
Various dealers mention a lower interest rate when in reality it's much
greater. They do this by either purposefully quoting the money factor as
the interest rate or adding the loan without amortizing some closing
fees, similar to the security deposit, into the loan lease. Get the money
part for instance: this is typically expressed as a four decimal digit,
something like 0.004. Some dealers mention this as a 4% interest rate when
in fact you need to multiply it by 24 to get a rough idea of the interest
rate on your loan. In this example, the interest rate is much higher 9.6%
than the quoted rate of 4%. Make sure you crunch the numbers and grasp the formula they use to calculate their interest rate. Look out for any fees not factored into the calculation. If you are not pleased, do not enter into the lease
contract.
Terminate your lease early for a low penalty
This is an all-time leasing fraud. You ask your wholesaler how much you will pay
if you desire to terminate your lease and he tells you: You should get out
early' Sure thing, you just pay an early termination fee of $300. What he
is quoting is just the small administrative penalty of early termination,
there is a much stiffer penalty called early termination fee and this runs
into thousands of dollars.Do not confuse the early termination administrative penalty with the termination fee. Read the small print carefully and know precisely how hugely you desire to get charged should you drop your lease before its
end.
Pay for an extensive warranty you don't require
This is another shell game to enlarge the dealers profit at your costs.
The businessman slides an extended-warranty into the deal while it's previously
factored into the monthly payments, or he tricks you into buying a 36-month
warranty on a 24-month lease. You do not have to pay extra cash for a warranty already built into your payments or for one that goes well beyond your lease term.
They do slip an extended warranty in. Don't be fooled, the warranty is
already factored in.
No security deposit
Any businessman who advertises a $0 security deposit is not telling you the
whole story. A security deposit is always factored into the lease under the
provision for disposition fees.
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