Dealer Lease Tactics

By Eleora Knoff

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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.

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:

"Why Buy When You Can Lease?"

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, 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 Lease Rate -- Only 3 Percent Financing!"

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.

"No-Hassle Early Termination"

As if. There is never an easy way to terminate a lease. You have signed a legal agreement, and you are legally bound to meet your obligations. You dealer knows that your situation can change and that you may need or want to terminate the agreement early, but there is no "hassle-free" way to do it. The legal lease agreement that you signed requires you to make your monthly payments for the remainder of the lease term, and you have little chance of getting out early. Those who default on their lease payments, or try to end the agreement before the agreed upon term, are hit with hefty financial penalties.

These are all common and effective tactics that leasing agents use to bait and hook customers every day. So, how can you protect yourself from walking in to one of these traps? Education is your best defense. Learn as much as you can about the leasing process. Understand the terms used by dealers. Estimate the payments on your own, bring the calculations with you, and then crunch numbers along with your dealer to be sure that you clearly understand how he or she arrives at a monthly lease payment.

If you're not clear about the terms, or if the dealer's numbers seem unreasonable, don't sign anything. You are the boss in this scenario, and it's your choice whether to sign the contract or simply walk away.

Knowledge is power, particularly when you're dealing with slick salespeople. Arm yourself with the right amount of confidence and education, and you'll have the upper hand in the situation. You can avoid falling for the typical tactics and, ultimately, you'll negotiate the best possible deal.

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About The Author
Author Eleora Knoff is a columnist for numerous Internet magazines, and you can read more of her work if you visit this web site or click here.