Dealer Lease Tactics

By: Eleora Knoff

We've all seen the jokes and movies that feature a slick car dealer who will stop at nothing to make a buck. Unfortunately, these shady characters are all too common in real life purchasing and leasing scenarios as well. Sometimes, unwitting consumers get so caught up in the new car excitement, and so overwhelmed by the terms and processes, that they rely on the dealer's "expertise" rather than making their own informed decisions.

If you are in the market for an automobile, you must beware. Dealers do have a few tricks up their sleeves to pull grab your money. Be on the lookout for these tactics and you can save yourself a bundle:

"Leasing is Better Than Buying"

Marketers will prey on the emotions of the buyer to sell the product. Automobile dealers know that most consumers just don't have a great deal of disposable income, so they'll use the promise of lower monthly payments to lure customers to signing long term agreements. These contracts can stretch the buyer's commitment to as many as five years or even more, making the payments even lower. There are two catches that can make these lengthy contracts dangerous for the average buyer.

First, possessing a vehicle for a longer period of time naturally means that there will be more mileage on the car at the end of the lease term. It's easy to put 80,000 miles on a car over the course of five years, but even this moderate number exceeds the 15,000 per year mileage limit that is written into most leasing agreements. Many consumers don't fully appreciate their obligations to pay for ever mile over the limit. At 20 cents per mile, those extra 5,000 miles can add up to a hefty bill at the end of the lease. Another disadvantage to an extended lease agreement is wear and tear that will inevitably affect your vehicle. Many warranties cover three years, making you entirely responsible for any repairs or damages that are incurred over the remaining two years.

"Low 3 Percent Lease Rate!"

Always read the fine print in every lease advertisement. The dealer or leasing agent is not quoting the actual lease rate that you will be paying, but simply giving you the lease money factor. It's similar to an interest rate, but not exactly the same. The lease money factor is used to determine your monthly payment, but you can calculate a more accurate rate by multiplying the money factor by 24. For example, the "low" lease rate of 3% is actually the money factor. When multiplied by 24, the product is 7.2%. This is the annual interest rate that you may unwittingly agree to pay on your lease contract.

"Stress-free Early Termination"

Please. There is no easy way to terminate a lease. It is a legal agreement, and you are bound by law to meet your obligations. Even though dealers are well aware that consumers' situations can change and some leasers will want or need to opt out early, there is no easy way. When you sign a leasing agreement, you are required to make monthly payments for the remainder of the lease term, and there is little chance of getting out early. Lease contracts impose hefty financial penalties upon those who default on their payments or terminate the agreement before the end of the scheduled term.

Leasing agents and car dealers use these "bat and hook" tactics every day. How can you protect yourself from walking in to one of these traps? Knowledge is always your best defense, so take the time to learn as much as you can about the leasing process. Become acquainted with the terms used by dealers. Do your own estimations to determine what your monthly payments will be, and then bring the calculations with you. Crunch numbers with your dealer to be sure that you clearly understand how he or she has arrived at the monthly lease payment.

Don't sign anything until you have a clear understanding all the terms, and be certain that your dealer's numbers are close to or the same as yours. You're in charge, 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.

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Essayist Eleora Knoff contributes articles to numerous web magazines, on comparison shopping and retail shopping themes.

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