Car leasing is sometimes a better option than buying. It gives you the chance to drive a new car for less. But in the reality, there might be more car leasing scams than car buying scams.
The leasing regulations are not as strict and defined as the ones for buying. This also leads to more leasing scams.
Here are some of the most common car leasing scams.
Artificially low-interest rates
The dealer may tell you a lower rate when you ask them about leasing.
They do so either by quoting the money factor as an interest rate or not adding some fees like amortization of the closing fees or the security deposit.
For example the money factor, which is a four decimal digit, let’s suppose 0.0005. Some dealers would tell it is a 5% interest rate. Meanwhile, to get the real interest rate you should multiply it by 24.
Make sure, you understand the real formula, not what they tell you. Relying only on what the dealer tells you, you would think the interest rate is 5%, while it is 12%.
Terminating for a low penalty
If you ask about the fee you have to pay in case you want to terminate the lease, the dealer will tell you a small sum. This can be as little as %250. However, that is just a part of the termination fee. Make sure you read your documents and pay separate attention to the early termination administrative penalty and the termination fee.
Don’t get extended warranties from the dealers. This is one of the most popular scams. You might be prompted to pay for a warranty that has already been calculated in your monthly payment. Or you might be prompted to get a longer warranty than your actual lease.
No Security Deposit
If it says in the advertisement there is no security deposit that means the story does not end there. Read the fine prints and look for more details.