We've all seen the stereotypical care dealer. You know; the one in the movies and jokes who will go to any length just to make a buck. Sadly, these shady characters are all too common in real-life purchasing and leasing scenarios as well. Unwitting consumers can get so caught up in the new car excitement, and so overwhelmed trying to understand the terms and processes, that they rely on the dealer's "expertise" instead of making their own informed decisions.
Automobile dealers and leasing agents have more than a few tricks up their sleeves to pull in bigger profits. By watching for these tactics, you can save yourself a bundle:
"Leasing is Better Than Buying"
The premise behind marketing is to use the emotion of the buyer to sell a product. Automobile dealers know that most consumers don't have a lot of spare cash and are nervous about parting with their disposable income. Therefore, they lure customers with the promise of lower monthly payments, and convince them to sign long term agreements. What consumers fail to realize is that these contracts can stretch the commitment to five years or even more. The payments are lower, but the term is much longer. These contracts can be dangerous for a couple of reasons.
First, having the vehicle for a longer period of time will naturally mean more mileage on the car. It's easy to put 80,000 miles on a car over the course of five years, but this exceeds the 15,000 per year mileage limit that is written into most leasing agreements. Remember, you will be obligated to pay for ever mile over the limit. At 20 cents per mile, those extra 5,000 miles can add up to a hefty lease-end bill. Another disadvantage to an extended lease agreement is the amount of wear and tear that will inevitably affect your vehicle. Many warranties cover three years, making you entirely responsible for any repairs or damages incurred over the remaining two years.
"Lease at Only Three Percent!"
Don't believe everything that you see in the advertising headlines. Always read the fine print. When you see a lease rate of, say, three percent, you're not seeing the actual lease rate that you will pay. This posted rate is really the lease money factor. While similar to an interest rate, it's not exactly the same. The lease money factor is the number used to determine your monthly payment. In reality, a more accurate rate is calculated by multiplying the money factor by 24. For example take the "low lease rate" of 3%, which is actually the money factor. Multiply this by 24 and you will have a product of 7.2%, which is the actual annual interest rate that you will pay on your lease contract.
"No-Hassle Early Termination"
Whatever. There is no easy way to terminate, or end, a lease. Your automotive lease is a legal agreement, and you are bound by the law to meet your obligations. Even though your dealer is well aware that your situation can change, and that you may want or need to opt out early, there is no easy way to end it. When you sign a leasing agreement, you are required to make the monthly payments for the full term of the lease, and there is little chance of getting out early. Hefty financial penalties are imposed upon those who default on payments or terminate the agreement before the end of the scheduled lease term.
These are effective and all-too-common tactics that leasing agents use to "bait and hook" their customers every day. So, how do you protect yourself from getting caught in one of these traps? Your best defense is knowledge. Learn as much as you can about the automotive lease process. Understand the terms used by car dealers. Make your own payment estimations, bring the calculations with you, and meet with your dealer to crunch numbers. This is the only way that you can be sure that you clearly understand how he or she arrives at a monthly lease payment.
Don't sign anything until you have a clear understanding all the terms, and your dealer's numbers are close to or the same as yours. Remember, you're the boss, so don't let your dealer pressure you into signing.
Knowledge is power, particularly when you're dealing with slick sellers. With the right amount of confidence and education, you will have the upper hand in the situation, you will be able to avoid falling for the typical tactics, and you will ultimately negotiate the best possible deal.
Columnist Eleora Knoff is an essayist for numerous web sites, on online shopping and retail shopping subjects. Click here for other unique 'car lease' articles.
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