Reader question:
I’m going to lease a car and want to get a good deal. Is there anything I should avoid?
Mia
There’s always something to avoid.
As with any industry that is completely integral to our lives, the auto industry contains a series of traps and tricks. It’s so easy to go right, but there are also many ways to go wrong, and for the consumer who isn’t paying attention and simply goes into a purchase or lease head first, it’s hard to tell whether they’re getting cheated or not. Because of this, it’s extremely important to always know what you’re doing before you make a big purchase like a car or commit to a car leasing contract. You’re dealing with your money and your credit, so getting lost in the maze of the auto industry is the last thing that you want to do.
- Limits on mileage. Watch out for this if you think you’re into a great new car lease deal. Companies who offer lower prices often set the limit extremely low and charge about 20 cents for every mile you go over the limit. So, if the limit is ten thousand and you drive fifteen thousand that year, you’re looking at a few thousand dollars more.
- Getting out of lease early. This sounds like a great option, but many companies offer it with expensive strings attached. They’ll advertise that you can get out of a lease before the term is up, but they’ll charge you a whole lot to do so, sometimes even the difference of the full purchase price of the car.
- Down payments. Some dealers will offer you really low monthly payments but make the down payment really high. When you come across a high down payment, consider it as part of the total cost of the lease.
- Comparing the lease price to the purchase price. Some companies try to sell the deal by saying that the payments you’re making for the lease are so much better than they would be if you’re buying a car. Well, yeah, of course they should be. When you finish making payments on a car purchase, you get to keep it. On a lease car, you have to give it back. The payments ought to be better on a good deal.
- Car price. Just because you aren’t actually buying the car, doesn’t mean the price doesn’t matter. Your monthly payments are calculated based on the total residual price of the car.
- Fees! Find out what they are.
- Hidden costs. Find out about everything you’ll be paying. The price they quote you might just be a base price, before taxes and various other fees they don’t want to mention.
Cheers,
Fashun Guadarrama.