Some people just can't stand to make
monthly payments, but like the concept of leasing. For these folks, the
car companies invented the "single-payment lease" where the
entire lease is paid for in one lump sum at the time of signing. Single
payment leases are OK for those with an abundance of cash as long as the
dealer calculates the single payment correctly. In this scam, the dealer
cheats the customer by charging him interest on the single payment for the
entire lease period.
How it Works: A
single-payment lease is like any other lease except the cap reduction
payment is large enough to drive the monthly payment to zero. In theory,
single payment leases will save you finance charges because you are paying
all of the depreciation and interest up front. Because single payment
leases represent less risk for the leasing company (they get all the money
up-front) you should expect a slightly lower lease rate.
In this scam, a dishonest dealer cheats you
out of these savings by calculating the single payment incorrectly.
Basically he calculates a monthly payment based on zero cash down
then multiplies it by the number of months in the lease. He then collects
this amount as the "single-payment". This method in effect
charges interest on the full amount of the lease including the single
payment. On an expensive car, the overcharge can be thousands of
How to Prevent: Calculate
the single payment yourself. This is the only way to ensure that you are
not being overcharged.