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The Internet offers a quick, efficient way to request auto lease quotes from multiple dealers. We recommend clicking on each of the links below to harvest two or three quotes before setting off to do battle.

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Top 10 Leasing ScamsTM
  1. Secret Price Hike
  2. Disappearing Trade
  3. Quote the Factor As APR
  4. Phony Lease/Buy Comparison
  5. The Undisclosed Acquisition Fee
  1. The Payoff Packing Scheme
  2. The Extended Warranty Rip-Off
  3. The Phantom Options Scam
  4. The Single-Payment Rip-off
  5. Phony Lease Trade-in

Free Bonus Scam: The Call-Back Leasing Scam

3. Quote the Factor as APR

This scam involves tricking the customer into thinking the lease has a lower interest rate than it really does by quoting the money factor as the interest rate.

How it Works: The lease charge or interest portion of your payment is calculated with what's called a money factor (see Calculating Lease Payments). A money factor is always a decimal number beginning with '.00'. An example of a money factor is .00345. At first glance a money factor looks like an interest rate shown as a decimal, but in reality they are quite different. For example, a money factor of .00345 would be equivalent to an interest rate of .083 or 8.30%. This scam uses this similarity as cover to lie about the interest rate on the lease. It goes like this: the salesman boasts about a special low lease rate of 2.6%, then calculates the lease payment using a factor of .00260. The equivalent interest rate is in reality about 6.24% or $52 a month for 36 months on our $20,000 car. The total overcharge: $1872. The beauty of this scam is that if the dealer gets caught, it boils down to a "simple misunderstanding. I said 2.6 and you just thought I meant 2.6%." This scam is growing in popularity since new disclosure laws have put a damper on Scams #1 and #2 (the new rules require disclosure of everything but the factor or interest rate).

How to Prevent: Ask for the money factor and the interest rate. Get the salesman to write this down on the back of his business card. This will avoid any of those silly "misunderstandings." 


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