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Leasing has exploded in popularity over the past few years becoming one of the most common financing methods for obtaining a new car. What has fueled this surge in leasing? The answer is a combination of two things: the public's never-ending appetite for bigger, cooler, faster, safer cars that they really can't afford and the auto industry's need/desire for continued double-digit growth in profits. Hence the dilemma: how can the car companies give the public what they want (and can't afford) at a price that allows for healthy profits. The magical answer is leasing. Something for Everyone But for car dealerships, leasing has been a godsend. It is the Holy Grail that has allowed their business to remain wildly profitable despite the fact that staggering price increases have long outstripped the growth in income of their customers. Don't believe it? Make a list of the 15 most affluent business owners in your community and chances are you will find a couple of dealership owners on the list. "How is this possible?" you say. The last time you haggled for a new car, they all swore up and down that they were losing money on the deal. Yeah, right. Secretly, we all want this to be true - an indication perhaps of our exceptional negotiating skills. But, alas. This is not the case. The reality is that leasing has become an incredibly effective tool for dealers to sell their product at a significantly higher price and profit margin. This is accomplished in three ways. 1) Leasing makes the car more affordable and therefor easier to sell. 2) It allows the customer to afford a more expensive car, and the more expensive the car, the larger the profit. 3) Leasing allows the dealer to legally hide the true cost/price of the vehicle and charge you a higher price than you would normally agree to. In fact, number 3 above is so easy that it has become almost irresistible for the dealer not to gouge you on a lease. It has become such a common practice that when caught, the salesman/finance manager may become indignant as though they somehow have a right to overcharge you simply because you are leasing. If it has happened to you don't feel bad. Many, many very smart people have been ripped off badly and the process was so slick and effective that they didn't and still don't even know they were overcharged.
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