We've all seen the stereotypical care dealer. You know; the one in the movies and jokes who will go to any length just to make a buck. Sadly, these shady characters are all too common in real-life purchasing and leasing scenarios as well. Unwitting consumers can get so caught up in the new car excitement, and so overwhelmed trying to understand the terms and processes, that they rely on the dealer's "expertise" instead of making their own informed decisions.
Automobile dealers and leasing agents do have a few tricks up their sleeves to pull in more profits. Watch out for these tactics, and you can save yourself a bundle:
"Leasing is Better Than Buying"
Sly marketers often prey on the emotions of the buyer in order to sell the product. Automobile dealers know that most consumers don't have a great deal of disposable income, so they'll use the promise of lower monthly payments to lure customers to signing long term agreements. These contracts can stretch the buyer's commitment to five years or even more, with the promise of lower payments. These lengthy contracts pose danger to the average buyer, for a couple of reasons.
First, when you drive a vehicle for a longer period of time, it will naturally accumulate more mileage. Most drivers can easily put 80,000 miles on a car over the course of five years, but this exceeds the 15,000 per year mileage limit that is written into most leasing agreements. Remember that you are obligated to pay for ever mile over the limit, and at 20 cents per mile, those extra 5,000 miles can add up to a substantial lease-end bill. Extended leases are also problematic because of the amount of wear and tear that will invariably affect your vehicle. Most warranties cover three years, but if you have a five year lease, you'll be responsible for any repair costs that are incurred over the remaining two years.
"Low Lease Rate -- Only 3 Percent Financing!"
Don't believe everything that you see in the advertising headlines. Always read the fine print. When you see a lease rate of, say, three percent, you're not seeing the actual lease rate that you will pay. This posted rate is really the lease money factor. While similar to an interest rate, it's not exactly the same. The lease money factor is the number used to determine your monthly payment. In reality, a more accurate rate is calculated by multiplying the money factor by 24. For example take the "low lease rate" of 3%, which is actually the money factor. Multiply this by 24 and you will have a product of 7.2%, which is the actual annual interest rate that you will pay on your lease contract.
"No-Hassle Early Termination"
As if. There is never an easy way to terminate a lease. You have signed a legal agreement, and you are legally bound to meet your obligations. You dealer knows that your situation can change and that you may need or want to terminate the agreement early, but there is no "hassle-free" way to do it. The legal lease agreement that you signed requires you to make your monthly payments for the remainder of the lease term, and you have little chance of getting out early. Those who default on their lease payments, or try to end the agreement before the agreed upon term, are hit with hefty financial penalties.
These are effective and all-too-common tactics that leasing agents use to "bait and hook" their customers every day. So, how do you protect yourself from getting caught in one of these traps? Your best defense is knowledge. Learn as much as you can about the automotive lease process. Understand the terms used by car dealers. Make your own payment estimations, bring the calculations with you, and meet with your dealer to crunch numbers. This is the only way that you can be sure that you clearly understand how he or she arrives at a monthly lease payment.
Don't sign anything until you have a clear understanding all the terms, and your dealer's numbers are close to or the same as yours. Remember, you're the boss, so don't let your dealer pressure you into signing.
Knowledge is power, particularly when you're dealing with slick sellers. With the right amount of confidence and education, you will have the upper hand in the situation, you will be able to avoid falling for the typical tactics, and you will ultimately negotiate the best possible deal.
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Author Eleora Knoff is a writer for several web sites, on online shopping and product to sell subjects.
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