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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

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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.

 


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