8 Car Leasing Scams You Need To Avoid Today
Leasing: Deceptive Practices at Car Dealerships – How They Work
Online car buyers and shoppers alike are in more danger to get hoodwinked at the hands of scammers. The anonymity of the internet, paired with a high value of transactions makes it hard to catch these tricksters. Although most car dealers are honest, when it comes to leasing most of the scams arise because of misinformation or confusion about the leasing process. People are manipulated into giving their confidential information using social engineering techniques. What are those? Let’s take a look first at deceptive practices done in general at every car dealership.
Watch the video below to see some scams pulled by dealers and other things to check for when buying a car:
1. Raising Car Price
Consumers who know how car leasing works are aware of the fact that the negotiated car price directly impacts the monthly lease payments. It is called the capitalized cost. The most common car leasing scams involve the dealer swapping the car prices after negotiation.
The law requires you to state the capital cost in the contract, but many consumers fail to pay attention. A dealer could easily add up a few thousand dollars without you noticing. So, make sure that the capitalized cost is the same you negotiated for the car earlier.
2. Lying About Money
Leasing customers often tend to get confused about money. The money factor is the interest rate, which is shown as a fraction. You need to multiply it with 2400 to convert it into an interest rate. Many customers don’t know that for dealers, it is an easy way to dupe you off some money.
For example, if the money factor happens to be .0025, it implies that the interest rate would be 6% (.0025×2400). A crook dealer might fool you and tell you that the interest rate is 2.5% in an attempt to confuse you between 2.5% and .0025. And if you notice it luckily, they will claim that they told you about the money factor is 2.5 instead of the interest rate. That is downright a scam, but these people will always come up with an excuse.
3. Using Jargon to Confuse You
Every industry and business has its jargon. Scammers tend to confuse the potential victims and confuse them with jargon. You should know that any product or service that you are considering, they can explain to you in simple terms.
If the leasing company is not being clear about the information and is throwing jargon here and there and giving vague information about the deposit, monthly agreements or the agreement period even and want you to finalize the deal and sign the contract ASAP, walk away.
4. Concealing Add-ons Into the Lease
It is similar to the first scam, as they increase the overall price of the vehicle. But this time, they include add-ons such as extended warranties or even “pinstriping.” As the manufacturer warranty covers everything during the short duration of the lease, purchasing an extended warranty makes no sense. It is useless. The customer, being uninformed, doesn’t notice the increase in the monthly payments.
5. Increasing the Length of the Lease
You may be negotiating for 24-36 month lease. But if the monthly payments are high, then the dealer would lengthen the lease term to 39 months or even longer. To lower the amount. They won’t tell you this. Yes, it will be written in the contract, but if you are not paying attention, you could easily overlook it.
6. Don’t Give in to Pressure
Usually, scammers would try to pressure you into making a quick decision so that you do not take time to do some rational thinking of your own. If you are dealing with an honest sales associate, he would always give you complete information and give you enough time to make an informed decision. Any dealer who pressurizes you into making a final decision and rushes you into signing the contract should not be trusted.
7. Stealing your Down Payment or Trade-in
Did you know that dealers could steal your down payment and/or trade-in in a jiffy? It is similar to the capitalized cost scam. This one involves removing or altering the capitalized cost reduction in the contract. As the terms are confusing, they can trick people.
If you are putting a down payment on the lease or equity in a trade-in, see that it is included in the lease contract. These payments are supposed to bring down the capitalized cost, but a few dishonest dealers choose to leave this option out of the contract.
8. Do Your Homework
It is crucial that if you are leasing a car, do your background research. Recently scammers have been seeking people who have a poor credit history via Instagram. These accounts frame the potential victims and ask them to send a direct message and take policy. If you ever come across an advertisement regarding car leasing online, always do a background check and the contact details. Check if is legit. If car leasing is now giving you second thoughts, you could always let someone take over your car lease or transfer a car lease.
Dealership Deceptive Practices: How To Report
Make your family and friends aware of these 8 car leasing scams by sharing the article on social media using the buttons provided. You can also officially report the scammers to the Federal Trade Commission using the link below:
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