The Shifting On A Leasing Contract

Leasing is not always the best way to get a car.  The dealers know it and they resort to all kind of tricks in order to make you sign a leasing contract, even it is not in your best interest.  There are many terms and additional information that the dealers don't mention deliberately and that is a way of leasing a car at a higher price than the real one.

Most times people sign the contract without understanding the financial terms, and this is a sure way to a disaster in your savings account.  Terms such as capitalized costs or residual value will surely disconcert the customer, but knowing exactly what leasing is about means previous research and understanding of the terms and conditions.  But the leasing dealers still try to allure us, hoping that they will get a fast and easy profit on our expense.

First thing they do is to convince us that leasing is better than buying. Their arguments are lower payments every month, a long period of repayment from 5 years up. The trick is about how much will you drive the car.  If your car has a three years warranty and you exceed the mileage, the lease contract being signed for a 5 years term, when the warranty expires you will have to pay expensive repairs costs for a car that does not belong to you.

The Annual Percentage Rate seems cheap on the dealers' offer: only 2-3%!  What you do not know is that this is not the interest rate that you are getting in reality.  He will allure you with the lease money factor.  This can be converted to the real annual interest rate by multiplying the money factor by 24.  This could lead to a 7.2-8% rate.  This money factor might seem for the naive ones a simple mistake.

The next trick is that the dealer tell you that you can end up your lease contract any time you wish to or swap cars before the contract closes. But the true fact is that it's not easy to close a leasing contract before the normal closing, it is difficult and very expensive because of the penalties for either defaulting on monthly payments or ending the lease earlier.

These are just a few tricks that leasing dealers apply to in order to convince you that leasing is the best choice you have.  Do not sign the contract until you fully understand the term and especially the numbers, the interest rates and the monthly payments.  Take the contract home and study it carefully, it is better that way because you will have the chance to think it through and also the dealer might pressure you into signing.