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The excitment of leasing a brand-new car can lead you to rush into a contract without reading the fine print. And, some unscrupulous car dealers can spot an over-excited and unsuspecting consumer from a mile away. So before you sign your name on the dotted line it's important for you to spot a leasing scam. Here are seven of those leasing scams:
One-time payments become monthly payments:
One way dealers make more money is to spread out one-time payments, like the security deposit, over the life of the loan (it's called "amortizing"). Rather than having you pay the $500 security deposit upfront, the dealer will do you a "favor" and spread the cost of the deposit over the life of the loan. When it's amortized, it's subject to interest, and of course, you end up paying more. Try to avoid this option whenever possible.
False low interest rate
Dealing with any sort of contract can be confusing. Before you sign your contract for your new car, double-check that the interest rate you are promised is the one you are getting. Dealers can lead you to believe you're getting a good interest rate, but when you read the fine print you're actually being charged a high rate.
Early term policy
If you want to get out of your lease early, you will be penalized and pay thousands of dollars. There is also normally a small fee on top of this penalty. If you ask what the cost is of getting out of the lease, the salesperson may tell you that this is the fee. They're not technically lying -- they're just not telling the whole truth. This is just the small administrative fee on top of the usual penalty. Don't be fooled!
Before you take out a lease, make sure you really want to keep the car for the number of years set in the lease. Getting out of a lease is costly.
No Fee
Dealers like to say there is no security deposit or fee in the lease. But be sure to read the lease carefully. They can often replace one fee with another fee with a different name -- they are actually the same.
The Term of the Lease
Many people focus on negotiating the monthly payment. That is just half the story. You also need to be aware of the term of the lease: the number of months. Your total price is the combination of the two.
If you pay $350 a month, you might think you're getting a better deal than your friend whose monthly payment is $400. But if his lease is three years and yours is four, you're paying $2,400 more! Do the math: $350 x 48 months is $16,800. $400 x 36 months is only $14,400.
Lease Guaranty
Some dealers will tell you that if you choose to default on your lease that it's not problem. This is not always true. As you probably know, you cannot back out of a lease because it is a contract. If you do break the contract, the penalties can cost you thousands of dollars and damage your credit rating. What happens is that the dealer pays off you bank loan, so you now owe the dealer -- which is worse.
Extended Warranty
It's so easy for a dealer to convince the unwary that they have to slip in an extended warranty. Some of these warranties are even for a longer period than the lease!
As with any large purchase, it's necessary to do your homework. If you don't you can be scammed easily and end up paying more than you should for a car.
@ SMSgt Minister Gerald A. Thomas Capt Christopher MuellerCOL Mikel J. BurroughsSgt Joe LaBrancheSSgt (Join to see)Capt Seid WaddellSrA Christopher Wright LTC Stephen F.PO2 Ed C. SFC(P) Hercules Lobo MSG Tom EarleyPVT James Strait Alan K. PO1 William "Chip" NagelSGT John " Mac " McConnellSSG Leo Bell SFC William Farrell LTC (Join to see) SPC Britanny *Winnie* Balthaser Maj Kim Patterson
One-time payments become monthly payments:
One way dealers make more money is to spread out one-time payments, like the security deposit, over the life of the loan (it's called "amortizing"). Rather than having you pay the $500 security deposit upfront, the dealer will do you a "favor" and spread the cost of the deposit over the life of the loan. When it's amortized, it's subject to interest, and of course, you end up paying more. Try to avoid this option whenever possible.
False low interest rate
Dealing with any sort of contract can be confusing. Before you sign your contract for your new car, double-check that the interest rate you are promised is the one you are getting. Dealers can lead you to believe you're getting a good interest rate, but when you read the fine print you're actually being charged a high rate.
Early term policy
If you want to get out of your lease early, you will be penalized and pay thousands of dollars. There is also normally a small fee on top of this penalty. If you ask what the cost is of getting out of the lease, the salesperson may tell you that this is the fee. They're not technically lying -- they're just not telling the whole truth. This is just the small administrative fee on top of the usual penalty. Don't be fooled!
Before you take out a lease, make sure you really want to keep the car for the number of years set in the lease. Getting out of a lease is costly.
No Fee
Dealers like to say there is no security deposit or fee in the lease. But be sure to read the lease carefully. They can often replace one fee with another fee with a different name -- they are actually the same.
The Term of the Lease
Many people focus on negotiating the monthly payment. That is just half the story. You also need to be aware of the term of the lease: the number of months. Your total price is the combination of the two.
If you pay $350 a month, you might think you're getting a better deal than your friend whose monthly payment is $400. But if his lease is three years and yours is four, you're paying $2,400 more! Do the math: $350 x 48 months is $16,800. $400 x 36 months is only $14,400.
Lease Guaranty
Some dealers will tell you that if you choose to default on your lease that it's not problem. This is not always true. As you probably know, you cannot back out of a lease because it is a contract. If you do break the contract, the penalties can cost you thousands of dollars and damage your credit rating. What happens is that the dealer pays off you bank loan, so you now owe the dealer -- which is worse.
Extended Warranty
It's so easy for a dealer to convince the unwary that they have to slip in an extended warranty. Some of these warranties are even for a longer period than the lease!
As with any large purchase, it's necessary to do your homework. If you don't you can be scammed easily and end up paying more than you should for a car.
@ SMSgt Minister Gerald A. Thomas Capt Christopher MuellerCOL Mikel J. BurroughsSgt Joe LaBrancheSSgt (Join to see)Capt Seid WaddellSrA Christopher Wright LTC Stephen F.PO2 Ed C. SFC(P) Hercules Lobo MSG Tom EarleyPVT James Strait Alan K. PO1 William "Chip" NagelSGT John " Mac " McConnellSSG Leo Bell SFC William Farrell LTC (Join to see) SPC Britanny *Winnie* Balthaser Maj Kim Patterson
Top Auto Leasing Scams
Posted from military.com
Personal Finance
Loans
Money
Scam
Posted >1 y ago
Responses: 3
2
2
0
I have a farm truck and the only reason I license it is because I have to go 6/10ths of a mile on a State trunk line to get to one of my hay barns and 4/10ths of a mile on the same road to get gas. I put less than 2500 miles a year on the truck. I have a dealership that actively tries to get me to lease a 3/4 ton truck on a low mileage lease. I have no idea how they know I have a low mileage truck. They send me two or three mailers a week and call me every 3-4 weeks. It is annoying as hell.
I finally drove the truck to the dealership and showed them the marks where the horses bite on the corners of the hood, pulled the antennas and wipers off, and the dents where the goats dance on top of the cab and the hood. I told them I'd lease two if they would accept the damage on turn-in with no payment from me. No deal.
They still pester me.
I finally drove the truck to the dealership and showed them the marks where the horses bite on the corners of the hood, pulled the antennas and wipers off, and the dents where the goats dance on top of the cab and the hood. I told them I'd lease two if they would accept the damage on turn-in with no payment from me. No deal.
They still pester me.
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Maj John Bell
SP5 Mark Kuzinski - I could probably only carry two round bales on a bike. I can move six with my truck and trailer. You believe me right?
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SP5 Mark Kuzinski thanks for the situational awareness read on auto leasing scams. Always privy information to be aware off.
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Thanks for sharing SP5 Mark Kuzinski. Scams have always been around since bartering began. However since the internet became widespread, scams have multiplied.
I have noticed for a long time, that if you type in a organization to search for and misspell it by one letter there are many websites looking to draw you in.
Of course there are many legitimate business approaches such as amortizing which can lure the unsuspecting to pay more than they might otherwise.
LTC Stephen C. Maj William W. 'Bill' Price Capt Christopher Mueller Capt Seid Waddell CW5 (Join to see) SMSgt Minister Gerald A. Thomas SGM David W. Carr LOM, DMSM MP SGT SSG James J. Palmer IV aka "JP4" SSgt (Join to see) SGT (Join to see) SP5 Mark Kuzinski SGT Forrest Stewart SGT John " Mac " McConnell SGT Robert George SPC (Join to see) SrA Christopher Wright Kim Bolen RN CCM ACM
I have noticed for a long time, that if you type in a organization to search for and misspell it by one letter there are many websites looking to draw you in.
Of course there are many legitimate business approaches such as amortizing which can lure the unsuspecting to pay more than they might otherwise.
LTC Stephen C. Maj William W. 'Bill' Price Capt Christopher Mueller Capt Seid Waddell CW5 (Join to see) SMSgt Minister Gerald A. Thomas SGM David W. Carr LOM, DMSM MP SGT SSG James J. Palmer IV aka "JP4" SSgt (Join to see) SGT (Join to see) SP5 Mark Kuzinski SGT Forrest Stewart SGT John " Mac " McConnell SGT Robert George SPC (Join to see) SrA Christopher Wright Kim Bolen RN CCM ACM
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