|
4. Phony Lease/Buy
Comparison
Customers who never intended to lease, are
tricked into high-profit leases by using nonsense lease/buy comparisons.
How it Works: This scam is
intended to set you up for Scam #1 or #2 by making the lease look so good
compared with a loan, you won't notice a nice little bonus for the boys in
the back room. To steer you into a high-profit lease, the salesman might
make the following lease/buy comparison on a $20,000 car:
| Lease |
Loan |
Sum Pmt:
$344.45 x 24 mo =
$8,266.80
Plus $1500 cash
down
Total Cost: $9,766.80 |
Sum Pmt:
$963.51 x 24 mo = $23,124.24
Plus $1500 cash
down
Total Cost: $24,624.24 |
Sound too good to be true? Well, it is.
Let's take a look at what the salesman may have conveniently forgot to
tell you:
- First (and most important), you own the
vehicle after making loan payments. If our example car is a 1999 Honda
Accord LX, Black Book says this vehicle will be worth 63% of MSRP or
$13,932 after 24 months. Assuming you sell the vehicle for this at the
end of the loan, this knocks the cost of the loan down to $10,692.24.
- Second, the salesman built in a secret
price hike of $1000.00 into both lease and loan. The lease payment
still looks affordable, but the high loan payment is now out of sight.
- Third, the cost of the lease did not
include a $450 acquisition fee and a disposition fee of $250 when you
turn in the lease.
- Finally, the interest rate used to
calculate the loan payment was for a loan through the dealer at 11%
verses the lease interest rate of 7%. Find a loan for 8% from your
bank or credit union and you shave $28.52 a month off the loan
payment.
Let's make the comparison again with all
the facts:
| Lease |
Loan |
Price: $20,918
(includes
$1000 price hike)
24 Month Lease from dealer at 7%
Sum Pmts: $344.45 x 24 mo. =
$8,266.80
Plus $1500 cash down
Plus $700 Fees
Total Cost: $10,466.80 |
Price: $19,918
(w/o $1000
price hike)
24 Month Loan from bank at 8%
Sum Pmts: $934.99 x 24 mo =
$22,439.76
Plus:
$1500 cash down
Less: $13932
loan-end value
Total Cost: $10,007.76 |
How to Prevent: Never
trust a lease/buy analysis from a dealer. Do the analysis yourself and be
sure to include all fees, rebates, and taxes. |
