$99 Car Lease
Saw a $99 a month lease and got excited? You probably think that it’s the best deal ever. Well, think again because that seemingly less amount a month is actually one big scam. Dealers use this technique to fool people who are fixed upon the monthly payment. Let me show you what happens “behind the scenes”
You need to understand how that monthly sum is determined. People don’t understand that 2 individuals may pay $350 a month each for the same car and one of them is getting a good deal while the other is getting a bad one.
To understand that let’s look at the parameters from which a dealer decides the monthly payment. The fee is a combination of: an interest for the loan, a fraction of the present loan (for example if you have a 48 months loan you pay 1/48 each month) and combined with other taxes and whatever fees. These elements combined make your monthly fee. If you do not negotiate a good deal for your car than the monthly payments will never go down. This is available even if you want to lease your next car. No parameter has a greater effect on the deal than the car’s price. That is logical.
The next step is taking the purchase price and deducting an eventual down payment. Let’s assume you’re buying or leasing a $25.000 car and you pay $5000 at the beginning. You’re left with $20000 from where we will add the fees that you might have negotiated to obtain the final amount of money you will be required to pay.
When you’re searching for financing you must know what is the interest on, for example, $20000. Once again is common knowledge that, if the length of the loan is increased so is the amount if financing. Never be afraid to ask for deductions if you make your loan term shorter.
Let’s assume that two individuals go for the same car, both going for $20000. One of them got 7.9% financing on a period of 60 months. That will get him a monthly fee of $404.57. The other went for 4.9% rate on a 48 months loan, which brings him to a monthly fee of $459.68. Keeping in mind that both went for the same amount of money, who has the better deal? If you think that is the one that went for 60 months because of a smaller fee you would be wrong. Consider that one of them is paying $459 48 times while the other is paying $404 60 times. If you do the math you’ll see that the one that went for 48 months will pay $22,064 while the one with the smaller fee on 60 months is paying nothing less than $24,274, alot more than the other one and alot more than the car is worth.
Now since you’ve seen how the process is done you understand that anyone could go right ahead and get a $99 a month and get a Mercedes. But he’ll be paying it in more than 10 years and get to put out of his pocket, almost twice the price the car is worth. That’s why car dealers make such “great” offers to customers that are judging the amount they pay just by the monthly fee. There is no greater delight to a car dealer than to sign you up for 72 months so that you can pay 50% more than the car is worth turning the whole process in the easiest scam on the market, no matter wether you buy or lease.
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