Jan 08 2009
Auto Leasing Scams
Car-leasing is considered to be more attractive than buying. However, you should be aware that leasing regulation does not require as much disclosure as buying a vehicle. This has given rise to many car leasing scams that makes customer believe they are into a good deal when, in fact, that’s not true. Here are some of the most common scams and how to avoid them.
1. Artificially low interest rates
Some dealers use to quote a lower interest rate. However, in reality it’s much higher. Dealers do this by either purposefully quoting the money factor as the interest rate or calculating the loan without amortizing some closing fees, like the security deposit, into the loan lease. To avoid this scam look out for any fees not factored into the calculation. If you are not satisfied, do not enter into the lease agreement.
2. Terminate your lease early for a low penalty
In fact, this is an all-time leasing scam. The dealer will tell you that if you want to terminate your lease you only pay an early termination fee of $300. What he is quoting is only the small administrative penalty of early termination, there is a much stiffer penalty called early termination fee and this runs into thousands of dollars.
Do not confuse the early termination administrative penalty with the termination fee. Read the small print carefully and know exactly how much you will get charged should you terminate your lease before its scheduled end.
3. Pay for an extended warranty you don’t need
This is another dealer trick used to profit at your expense. The dealer slides an extended-warranty into the deal or he tricks you into buying a 36-month warranty on a 24-month lease.
You do not have to pay extra money for a warranty already built into your payments or for one that goes well beyond your lease term.
