TribLIVE

| Business


 
Larger text Larger text Smaller text Smaller text | Order Photo Reprints

Understand how auto leasing works before signing an agreement

On the Grid

From the shale fields to the cooling towers, Trib Total Media covers the energy industry in Western Pennsylvania and beyond. For the latest news and views on gas, coal, electricity and more, check out On the Grid today.

On the web

Federal Reserve guide to auto leasing: www.federalreserve.gov/pubs/leasing/

Car leasing scam warnings

Because of the confusing nature of leasing, some dealers will change the numbers around in the contract and literally steal money from you. To prevent this, understand terms such as “capitalized cost” (the purchase price of the car).

Many car shoppers don't realize you need to negotiate the purchase price of the car when leasing, so they leave it up to the dealer and end up paying the full sticker price.

A dealer can misrepresent the money factor, which is basically the interest rate shown as a decimal. To convert it to an interest rate you're familiar with, you need to multiply by 2,400.

Add-ons such as pin striping or extended warranties can be hidden in the lease agreement, usually in the capitalized costs. You don't need an extended warranty because the manufacturer warranty usually covers everything during the short duration of the lease.

Watch out for double first payments. Leases usually require you to make the first monthly payment up front, but sometimes the down payment includes this; other times it doesn't. Make sure you are not paying it twice.

Source: RealCarTips.com

By Susan Salisbury
Thursday, May 2, 2013, 12:01 a.m.
 

Louis Ehrlich of Boynton Beach, Fla., had never leased a car before. He had always purchased his vehicles outright.

But because he's 94, he thought leasing might be a good option. So earlier this year he ventured to a Broward County, Fla., car dealer where he traded in his 1993 Lexus as part of the deal.

After the negotiations and signing a two-year lease he describes being “as long as a newspaper page” with a lot of fine print, Ehrlich said he wasn't given as much for his trade-in as he was told.

“The salesman was so nice. He acted like he was my best friend,” Ehrlich said.

When all was said and done, he said he's sorry he leased because the process was confusing.

The Palm Beach Post recently has received a number of calls from people in their 90s and from their relatives about their car-leasing experiences.

A Texas man called saying he was upset to learn his 95-year-old mother, who lives in Palm Beach County, signed a four-year lease. He's not sure she should be driving and felt that she had been taken advantage of.

A Florida resident in his 90s asked how he could get out of the lease he signed after being “worn down” during a five-hour ordeal at the car dealer.

Al Payne, regional director of Seniors vs. Crime, a project of the Florida Attorney General's Office, said he has received numerous phone calls from seniors who leased vehicles and then regretted it. Payne said that often the callers have signed a contract without reading it.

“Read your contract before you put your signature on it,” Payne said.

Most people assume leasing a car is similar to renting, but leasing is simply another method of financing a vehicle, said Gregg Fidan of RealCarTips.com.

“Most dealers will give you a fair deal if you are informed. If they sense you have not done your research and can take advantage of you, they will. There are so many numbers and things like residual values and capitalized costs,” Fidan said.

Fidan recommends going through the nonprofit Checkbook.org and using its LeaseWise service. The fee is $350, and the company obtains bids from dealerships in your area and negotiates the best lease on your behalf. Checkbook.org can be reached at 800-475-7283.

Susan Salisbury is a writer for The Palm Beach (Fla.) Post.

 

 
 


Show commenting policy

Most-Read Business Headlines

  1. Natrona Bottling Co. keeps soda pop operation small, putting effort into craft, taste
  2. PPG Industries to buy Westmoreland Supply paint store chain
  3. Large-scale batteries are integral in shift to renewable energy
  4. Plastics, tech sectors crucial to cracker plants
  5. Hackers rip into heart of open-source software
  6. Open enrollment puts varied impact of health care law back in focus
  7. Student loan debt presents paradox
  8. 113 Federal Reserve staffers earn more than chief Yellen
  9. Mortgage in reach despite few dings
  10. Energy Spotlight: Steve Anthos
  11. Duquesne University business center helping Hispanic startups
Subscribe today! Click here for our subscription offers.