Tuesday, July 31, 2012

The Top Five Dealer Scams To Avoid When Leasing A New Car

It's important to note that not all car dealers are dishonest. Many dealerships strive to provide consumers with the best deals possible. As consumers are becoming more educated about the car buying and leasing process many dealers find it easier to be upfront and negotiate an honest deal. Using an online lease pricing service such as TopCarLeaseDeals.com is a good way to connect with pre-qualified dealers who are experienced at working with educated consumers.

The Lower Payment Pay-Off
Some car dealers will offer to pay off existing car loans if the consumer leases a new car. Not only will the new car lease come with lower payments, but also existing debt will magically disappear. This scam, along with the rest, falls under the if it sounds too good to be true, it probably is category.

What actually happens is that dealers add your debt to the cost of your new car lease. Then provided consumers with a financing plan with lower monthly payments than before. The consumer end up with more debt than before, it's just wrapped in a prettier package.

Closing Out the Old Lease Contract
Often once consumers complete the lease term they naively believe that their obligations are over. However, until the vehicle is returned to the leasing agency and all leasing closing paperwork has been completed and signed, the consumer is still responsible for the vehicle. Consumers should always keep a leased vehicle in their position until the lease is 100% terminated.

Dealerships often forget to return vehicles, lose keys, etc. It is always better not to trust the dealer to return the lease vehicle, than to be stuck with the hassle of correcting a problem after it occurs.

The Money Factor/Interest Switch
It may be an honest mistake, but an experienced car dealer should know that the money factor and the interest are two different things. The money factor appears as a very small decimal point, like 0.0029. Moving the decimal does not change the money factor into the interest rate. Instead, multiply the money factor by 2400. See the difference? Moving the decimal would give you 2.9% interest, when the real interest rate is around 7%.

Leases Can Not Be Negotiated
Consumers can negotiate a lease new car exactly as they would for the purchase of a new car. Leasing does not change anything. With a lease, the dealership sells the leasing company the vehicle based on the negotiated price. The consumer pays the leasing company for the use of the vehicle until the term ends. To the best offer consumers must negotiate the actual new car price of the vehicle and deduct all available rebates and incentives.

Don't Worry, Terminate
Although possible, terminating a lease is not easy or free of problems. If a consumer needs to terminate, some leasing companies will allow a lease transfer. Though, possible transferring a lease can be arduous and complicated.

Terminating the lease before the end of the term is likely to cost money and even damage the consumer's credit score. It is important to read the lease carefully and plan in advance to avoid dealing with these problems.

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