Car Dealer Leasing Tricks

Car salespeople may use lower monthly payments to lure customers into signing up for a long-term lease, with terms stretching for five years or even more. If you are committed to making payments for 5 or more years then you should definitely be avoiding a lease. It is likely that with a longer term lease you may go over the prescribed mileage limit that you originally signed up for and leases tend to charge 10 to 20 cents extra for every contract mile that you exceed. These extra charges can really kill a pocketbook when you turn in the vehicle. Also, warranties tend to only cover the first three years of a car's life which means you can be stuck with some huge repair charges during the last two years of your lease and possibly excessive wear and tear upon the end of your contract.

This low interest rate that you are being quoted is not the actual interest rate on your contract; it's the lease money factor. In simple terms, the money factor is the interest rate built into the lease. If you want to know your APR over the term of the lease, take the money factor and multiply it by 2400, no matter how many months are in your lease. You now calculated the actual APR that you are paying over the lifetime of your auto lease. For example, if you have a money factor of 2% and your lease term is 36 months then you would take .002 times 2400 to come up with an APR of 4.8% which these days really isn't that bad depending on your credit score.

Early lease termination is a common oversight that consumers make when signing their lease. Dealers know that your auto needs may change down the road and you may want the option of getting out of your lease early. No matter what the salesperson tells you, the truth of the matter is that you have signed up for a lease and you are stuck with the payments for the entire lease term. If you really want to get out of your lease early you will more than likely be stuck paying stiff penalties that you thought you had negotiated your way out of.