5. The Undisclosed
Here outrageously high fees may be secretly
built into your lease payment without your knowledge.
How it Works: Many leasing
companies (but not all) will charge a hefty fee to originate the lease.
This so-called acquisition fee or lease origination fee, is typically $450
but may be as high as $895. This fee was originally cooked-up as a
profit-enhancer by dealers who would blame the leasing company for the fee
then pocket the money. Consequently, negotiating away this fee used to be
easy. Unfortunately, the leasing companies wised-up and instituted real
acquisition fees, which are near impossible to negotiate. Salespeople are
trained to capitalize or build this fee into the lease payment where it
will likely go unnoticed.
Variations: Ford Motor
Credit adds an undisclosed "administration fee" equal to .00111
times the cap cost to every monthly payment. Over the life of the
lease this can add up to a huge sum of money. For example, the fee on a
vehicle with a $25,000 cap cost is $27.75 per month times, say 36 months.
This adds up to a whopping $999.00! What would you say to your bank if
they tried to charge you a thousand bucks to process your car-loan papers?
How to Prevent: Ask the
salesman if the lease he is offering has an acquisition fee and if this
fee has been capitalized or built-in to the payment. Always get the dealer
to breakdown and account for every penny of the cash required at signing.
Not all lease companies charge acquisition fees. If there is one, ask that
the fee be waived. If they say no, shop around. You may find an equivalent
deal from a dealer willing to eat the fee to get your business. And of
course if the fee is waived, calculate the payment yourself to make sure
that it doesn't find it's way back in without your knowledge.