Avoid Acquisition Fee In Car Lease
Don’t let the fact that you’re leasing a car instead of buying it, make you let your guard down because when someone promises something that seems too good to be true, it usually is. Keep in mind that leasing is still a contract that binds you to the company, so you cannot afford to be any less careful when you’re about to sign the dotted line.
Make sure you fully comprehend the method in which they have calculated your lease payments, the lease term, and other expenses that compose your lease agreement. Here are some of the biggest money drainers you need to be aware of when leasing a car.
The mileage rip-off is one of the most popular amongst dealerships. The dealers offer you low monthly payments but that means they set the annual mileage limit to 10.000. So this means that every mile you exceed over 10.000 means an extra 10 cents minimum and 20 cents maximum. Think about it, if you exceed the limit by 3000 miles, when you return the car end of the lease contract, you will have to pay a fee of $1800. This is the equivalent of $50 extra each month.
The early termination nightmare is also a well known wallet emptier. Often a dealer will promise you the moon and the stars to get you into a leasing contract. One of their soap bubble promises is the possibility of getting out of the lease early. And they indeed know that, but you will pay dearly for it. There are stupendous fees that come with breaking the contract early. You might have to pay the whole value between what you’ve paid and the car’s used market value, thus the dealership making sure that they get their money back one way or another.
Another factor that needs close attention is the car’s residual value. That is what the car will be worth at the end of the lease when it can be considered used car. For example a 30.000 dollars car in three years may depreciate to 18.000 dollars. This means that they calculate the payments so that the dealership covers the loss to depreciation and use. Ideally a dealer would calculate your payments according to the used car value given by the KBB or Edmunds, and sometimes they do, but because of all their extra fees, you end up paying a lot more than 12000 dollars given by the difference between the car’s new value and it’s residual one.
The purchase price ploy is one of the most successful of all dealer hoodwinks. They tend to compare the price of leasing a car with the price of purchasing a car. Keep in mind that there is a big difference between the two. When you finalize all the payments the car is YOURS, as when you end the lease, you simply have to take it back. Or pay extra to purchase it for its residual value.
Be extra careful when you hear the dealer say the car’s price doesn’t matter. It actually does because that is a main component in determining your monthly payments. Picture this for example: you want to lease a car that has a purchase price of $24.000 let’s say that you make the contract for three years so the car will be worth $12.000. If you divide 12000 by 36 represented by the number of months you would end up with a monthly payment of approximately 333 dollars. Yet if you negotiate with the dealer and obtain a starting price of 22.000 dollars you’d pay only 278 dollars.
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