Dealer Fraud

Here you can find and get information about tricks that car dealers and leasing companies most commonly use to scam unsuspecting vehicle buyers. Watch out for mileage limitations that get lowered when it comes time to sign the contract. Read each and every page carefully because unscrupulous car dealers have been known to “fan” the paperwork, exposing only the places they want you to sign! This essentially does not easily allow you to scrutinize what you are actually signing. Also, some car buyers have ended up leasing when they thought they were buying! Sales managers and sales reps know how to create confusion when it is time to sign the contract.

Always note every option because you may get charged for optional equipment on the car that is not actually included in the final price you thought you negotiated. To be sure try and compare the description of the car in the lease agreement to the window sticker description of the car you think you are buying.

Never pay upfront for the full cost of optional equipment just to get a certain lease price. Options should always be added to the selling price and made part of the lease payments.

Always look beyond the monthly payment when considering leasing. The “gross capitalized cost” is a fancy term for the auto’s “purchase price“. This is always negotiable no matter what the dealer tells you and always ask for any possible rebates or dealer incentives available at the time of the purchase.

The “capitalized cost reduction” is really the “down payment“. Put down as little as possible on the front end of a lease.

The “money factor” or “lease rate” is the “interest paid”. To determine the real interest rate multiply the money factor by 2400 which converts your approximate annual percentage rate. For example, .00310 x 2400 is 7.4% interest annually. Make sure you include the taxes into your monthly payment to make sure you can afford the payments.

It is also wise to add in the capitalized-cost reduction, acquisition fees, all the monthly payments and any disposition charges due when you return the vehicle at the end of the lease to figure out exactly what you will really end up spending for the auto over the life of the lease!

It would be a good idea as well as wiser to lease a vehicle from a car dealer and/or automaker rather than from a private leasing company. In some cases when it is time to turn your vehicle in, the dealer may give you more of a “break” on how much of the “wear and tear” deposit you get back, especially if you buy or lease another vehicle from the same dealer.

Car dealers know up to 30 or more ways to potentially trick and deceive car buyers! Of course, there are some federal regulators that try to curb widespread deception. However, salespeople for dealers may withhold information, make false or misleading claims about leasing obligations and even possibly engage in illegal “bait and switch” sales tactics concerning the exact models of cars being offered on an advertised deal. They may as well confuse car buyers about leasing terms of the sales contract.

Despite the regulation attempts, dealers are still able to encode lease terms in confusing language and withhold key financing terms. Which may be even worse, dealers are not even required to provide certain pertinent information until the customer is ready to sign a contract. Beware of “subvented” leases which are equivalent to the industry’s “blue plate specials”. Automakers, dealers and some leasing companies may offer low price leases on certain vehicles. The trick is only a few of these cars are fully loaded with options at the advertised cut- rate or discounted terms. Remember, possibly 8 out of 10 salespeople may not even disclose terms of the lease beyond the monthly payment. Always tell the salesperson you will not be ready to buy until you can compare the terms with the dealer’s competitors.