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2. Disappearing
Trade-In
This bold and illegal scam is a big money
maker for dishonest dealers. Simply put, part or all of your trade-in
value "disappears" and is never applied to the lease. In car
salesman lingo, this is referred to as a "home run". In attorney
general lingo, this is referred to as "fraud".
How it works: After
negotiating a price of $20,000 for a new vehicle, you decide to trade-in
your old car which is worth about $2500. You own the vehicle
out-right (no loan balance) so your equity is $2500. Instead of
calculating the payment based on $17,500 ($20,000 less $2500) or $263 per
month, the salesman uses the full $20,000 and comes up with a payment of
$345. Your trade equity mysteriously "disappears" in the lease
calculations. You might think, "That's a big difference - I would
notice that." But to many shoppers who just got done hearing about
$589 loan payments, a $345 per month lease is nothing short of a
miracle, and they buy it - hook, line, and sinker. More often than not,
the victim never knows what happened and consider themselves satisfied
customers.
Variations: The same scam
may also show up in the following variations.
- Disappearing Down Payment. The
salesman does not fully apply your cash down payment (cap reduction
payment) to the price of the vehicle.
- Cancel the Trade/Down Payment.
The salesman fully applies the trade equity or down payment then
performs a secret price for about the same amount thus canceling out
the effect of the trade or down payment.
- Disappearing Rebate. The same as
the disappearing Down Payment except it's the rebate that disappears.
A note of caution though: not all manufactures will extend rebates to
leasing customers. If a salesman tells you that a rebate does not
apply to a lease, confirm this by calling the manufacturer's 800
number or by calling other dealers.
Either way you slice it, it's fraud and
it's illegal in all 50 states.
How to Prevent: Prevention
is essentially the same as Scam #1: Disclosure before negotiating, then
check all the numbers yourself. If anything looks fishy, it's probably
because it is. |
