Leasing Scams: Single-Payment Fraud

There are car companies that offer a so-called “single-payment lease” for those consumers who don’t want to make monthly payments, but do want to lease a vehicle. In this type of leases the entire lease is paid in one sum at the time of signing. Typically, a single-payment lease is the same as any other lease, but the cap reduction payment is large enough to drive the monthly payment to zero. As all of the depreciation and interest is paid at the time of signing, single payment leases save the consumer finance charges. On the other hand single payment leases represent less risk for the leasing company, so they offer a much lower lease rate.

Single payment leases are OK if the car dealer calculates the single payment correctly. However, car dealers sometimes scam consumers by charging the consumer interest on the single payment for the entire lease period. Basically the dealer may calculate a monthly payment based on zero cash down then multiply it by the number of months in the lease. The dealer then collects this amount as the “single-payment”. Thus the consumer has to pay interest on the full amount of the lease including the single payment. It turns out that by simply calculating the single payment incorrectly the dealer cheats the consumer out of his/her savings and makes a profit of thousands of dollars.

You can avoid this dealer fraud if you calculate the single payment yourself and make sure that you are not being overcharged.