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Some Dealer Letting Tricks
Too often when it comes to auto-leasing, people get so dazzled through the myriad terms and the lingo thrown their way that they end-up paying by the nose, relying on a dealer's 'help' than their own informed decision.
Here is a look at some of the tricks dealers use for their benefit and leave the customers shelling hundreds of dollars more than the deal should be worth.
Trick 1: Renting always a better deal than buying
Dealers use the lure of lower-monthly payments to entice customers to sign for long-term loans, with terms stretching for five years or more, making the payments even lower. There are two catches with such lengthy contracts: higher mileage, exceeding the prescribed limit and hefty repair costs.
With leases charging on average 10 to 20 cents a mile for any extra mile over the agreed amount in the contract, and warranties only covering three years, you leave yourself wide open for hefty charges for excessive mileage and wear and tear.
Trick 2: Cheap 2-3% APR rate on your lease
The dealer is not quoting the interest rate you would be paying on your let; he's rather giving you the lease money factor. Whilst similar to an interest rate and crucial in determining your monthly payment, a more accurate rate is calculated by multiplying the money factor by 24. For example a 'cheap' 3% money factor is 24 X 0.003 = 7.2%. This gives you a better sense of what your annual interest rate on your lease contract is.
Trick 3: Stress-free early lease termination
Dealers know consumer driving needs change and they would like to have the option of getting out of a rent commitment sometime down the road, before their let ends. Truth of the matter is, when you sign for a lease, you are effectively saddled with monthly payments for the remainder of the let term and there is little choice of getting out early. Let contracts carry hefty financial penalties for either defaulting on monthly payments or terminating the let earlier than the scheduled term.
To avoid being on the receiving end of such 'tried and true' tricks, educate yourself about letting. Get down to the 'nitty-gritty' and understand what the letting terms used by dealers mean. Crunch the numbers along with him and understand how they arrived at the monthly payment figure. Don't sign anything until you've understood all the terms and your numbers match those of the dealer. Do not let the dealer pressure you into signing; you are the one to determine whether the agreement is right for you.
About the Author Uchenna Ani-Okoye is an internet marketing advisor For further reading please check out: Rally Race
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