Even though by and large most car dealers are honest in their dealings, it still pays to be clear about the leasing process and keep a sharp eye out so that you can avoid being scammed. When you are well informed about the car market as well as the technicalities of lease agreements, you can generally avoid being ripped off by unscrupulous dealers. Here’s what can save you a pot of money when you are scouting around to purchase a car for your business.
Car Price Hiked
When you approach a car dealer you should make it a point to negotiate the price of the vehicle that you have in mind and only then settle the terms of the lease so that the dealer cannot make any changes in the price of the vehicle later. In leasing terms, the cost of the car is called the capitalized cost, and as per law this needs to be mentioned clearly in the lease agreement. Since most customers only go by the monthly lease payment, they don’t bother about what look like minor variances. However, when you do the math you will realize that it is possible for the dealer to add a few thousand dollars to the car price without you even realizing it. You should thus remember to check that the capitalized cost of the car mentioned in the lease is exactly the same that has been negotiated by you.
Another way of increasing the price of the car is by including a number of add-ons for which you may not have any use at all. These tactics typically include stuff like decorative stripes or even extended warranties. Laying down good money for an extended warranty for a leased car is completely ridiculous since the vehicle has the usual warranty in force, and the car will be returned at the same time the warranty expires.
Down Payment or Trade-In Value Not Accounted For
It might seem crazy but an unscrupulous dealer can easily skim off a few thousand dollars from you by not including the down payment that you have made or the value of your trade-in, in the capitalized cost of the car. You should especially scan the lease agreement to ensure that the dealer has reduced the capitalized cost of the car to the extent that of the down payment or the value of the car that you have traded-in. If you are just looking at the monthly lease payments you have to make over the life of the lease, then it might just escape your notice, and the dealer will end up easily making an extra profit of a few thousand dollars.
Money Factor Vs Interest Confusion
It is commonplace to encounter dealers who keep on using the terms money factor and interest rate interchangeably when talking with customers. You really need to be clear what money factor means and how it is different from interest rate. When the interest rate is to be showed as a fraction, it is called the money factor. If someone mentions money factor to you be sure to multiply it by 2400 to arrive at the real interest rate. If the dealer mentions that the applicable rate of interest is 6%, it is best that the same figure is mentioned in the lease agreement. Do not allow the dealer to write 0.0025 as the money factor and pass it off as being another way of representing 2.5% and making you believe that you’ve got an unbelievably good deal.
Author bio: James Sullivan is a freelance journalist specializing in the automobile sector. He has written articles for various online media, including several for leasequit.com