FatherLarry99Hardtop

The selling price is usually MSRP:
Many dealers hide this value from you, diverting you to low monthly payments.
Confusing finance Charges:
Some dealers try to confuse you and lie about the money factor and often they won't even tell you the money factor!
Some dealers refuse itemize your trade-in:
Dealers are not required by law to itemize your trade-in, and this opens the gate for people to get ripped off, by trading in their car, then not getting credited on the new lease for the trade-in. When buyers insist that dealer itemize their trade-in, the dealer refuses.
Most states tax your monthly payment. But some states like Illinois and Texas tax the full amount of the car even though you are only using up 50% of the value then returning it. Even worse, buy the car at the end of the lease, you again pay sales tax on that residual amount! Don't lease if you live in Illinois or Texas.
High insurance costs:
Lessors require you have minimum insurance policies of $300,000.
Just walk away!

If you lease the car you may not get the rebate.
This increases your cost by $500-$1500, or $13-$42 monthly, Also make sure you get the rebate! Some dealers try to get out of it.
Misleading dealer lease ads.
See that $275 per month BMW ad? There's a tiny stock number of the only car there at that price. To get low monthly payments, you need huge down payments. The fine print states taxes are extra. For a $699 payment, add 6% Florida tax: $740.94.
Long-term cost of leasing is more than the cost of buying:
It's more if you buy the car at the end. If long term financial benefits are your only interests you should buy. Some dealers perform an analysis of Buy vs. Lease, and show leasing always cheaper. Always check their numbers.
Mileage limits:
Leases limit you to 12000 miles/year, some are 10,000 miles. My friend paid $1400 at the end of his BMW lease for excess mileage. Those trips you took come back to haunt you, and it's time to pay the piper.
You are responsible for program maintenance.
Better keep damn good records of every oil change, tune up, etc. and do them on schedule too. Don't give them any chance to claim excess wear and tear.
Some have large up front fees:
Leases used to be $0 down, $0 deposit. Even ads touting $0 down have some fees up front. Down payments create the illusion of lower monthly payments. To accurately figure your total cost of the lease, add up all down payments, fees.
Excess wear and tear clauses:
They could nit pick when you bring the car back. They can find a way to keep your refundable security deposit to offset claims of excess wear and tear.
All 4 tires must match!
This is in every lease contract. Leasing companies charge you for mismatched tires, and they charge MSRP, which you can get cheaper in a tire shop.
Too much fraud and unfair selling practices:
Florida Attorney General settled with Toyota regarding automobile leasing and 2,200 consumers got partial refunds. People in Florida and Georgia complained they were tricked into signing leases, when they thought they were buying.
People With Ford Leases Click Here!
Accidents may trigger early termination:
Your lease is terminated, and you're obligated to pay off the lease. Car insurance covers the damages, but not the cost of paying off the lease. You'll need gap insurance for that. You should buy gap insurance when you lease, or put down less than 20% on a purchase. But don't buy it from the dealer.
People want out of their lease early.
Dealers pay your penalties and buy you out of your current lease, but they just finance all that debt into the new lease. You think the dealer is giving something for a car you don't even own. They dipped you from one lease into another, now you are paying off 2 leases.

[IMG][Disadvantages of Leasing:
The selling price is usually MSRP:
Many dealers hide this value from you, diverting you to low monthly payments.
Confusing finance Charges:
Some dealers try to confuse you and lie about the money factor and often they won't even tell you the money factor!
Some dealers refuse itemize your trade-in:
Dealers are not required by law to itemize your trade-in, and this opens the gate for people to get ripped off, by trading in their car, then not getting credited on the new lease for the trade-in. When buyers insist that dealer itemize their trade-in, the dealer refuses.
Most states tax your monthly payment. But some states like Illinois and Texas tax the full amount of the car even though you are only using up 50% of the value then returning it. Even worse, buy the car at the end of the lease, you again pay sales tax on that residual amount! Don't lease if you live in Illinois or Texas.
High insurance costs:
Lessors require you have minimum insurance policies of $300,000.
Just walk away!

If you lease the car you may not get the rebate.
This increases your cost by $500-$1500, or $13-$42 monthly, Also make sure you get the rebate! Some dealers try to get out of it.
Misleading dealer lease ads.
See that $275 per month BMW ad? There's a tiny stock number of the only car there at that price. To get low monthly payments, you need huge down payments. The fine print states taxes are extra. For a $699 payment, add 6% Florida tax: $740.94.
Long-term cost of leasing is more than the cost of buying:
It's more if you buy the car at the end. If long term financial benefits are your only interests you should buy. Some dealers perform an analysis of Buy vs. Lease, and show leasing always cheaper. Always check their numbers.
Mileage limits:
Leases limit you to 12000 miles/year, some are 10,000 miles. My friend paid $1400 at the end of his BMW lease for excess mileage. Those trips you took come back to haunt you, and it's time to pay the piper.
You are responsible for program maintenance.
Better keep damn good records of every oil change, tune up, etc. and do them on schedule too. Don't give them any chance to claim excess wear and tear.
Some have large up front fees:
Leases used to be $0 down, $0 deposit. Even ads touting $0 down have some fees up front. Down payments create the illusion of lower monthly payments. To accurately figure your total cost of the lease, add up all down payments, fees.
Excess wear and tear clauses:
They could nit pick when you bring the car back. They can find a way to keep your refundable security deposit to offset claims of excess wear and tear.
All 4 tires must match!
This is in every lease contract. Leasing companies charge you for mismatched tires, and they charge MSRP, which you can get cheaper in a tire shop.
Too much fraud and unfair selling practices:
Florida Attorney General settled with Toyota regarding automobile leasing and 2,200 consumers got partial refunds. People in Florida and Georgia complained they were tricked into signing leases, when they thought they were buying.
People With Ford Leases Click Here!
Accidents may trigger early termination:
Your lease is terminated, and you're obligated to pay off the lease. Car insurance covers the damages, but not the cost of paying off the lease. You'll need gap insurance for that. You should buy gap insurance when you lease, or put down less than 20% on a purchase. But don't buy it from the dealer.
People want out of their lease early.
Dealers pay your penalties and buy you out of your current lease, but they just finance all that debt into the new lease. You think the dealer is giving something for a car you don't even own. They dipped you from one lease into another, now you are paying off 2 leases.

KDubb

cliff's notes please :crazy:

FatherLarry99Hardtop

No hurry. Take your time. There will be no test. :lol:

Keystone

WTF, over? :crazy: Glad you got that off your chest, Larry :lol: :lol:

95autoLT1

That's why I would never lease a car :) :)

Mag Red Monster

The only way you don't get screwed at a car dealer is if you pay cash! They have too many ways to hide things in the financing papers :smash:

JWilson

Hey Larry,

This is all good information! Thanks for taking the time to share it with us. Sorry that some bone heads didn't see the value of your words.

WILSON

FatherLarry99Hardtop

Thanks John. :seeya


[Modified by FatherLarry99Hardtop, 1:57 AM 10/28/2001]

Keystone

I saw the value of his words....twice. :lol: :lol:


Ligthen up, Wilson

JWilson

DUDE....

Look at it this way, this guy is trying to share his knowledge on a subject most people have little understanding about and you slam him. He obviously took a long time to jot his wisdom down for all of us. If you saw it twice oh well the back button on your browser works real good and is very fast. As far as lightening up how the hell do you know what I look like :lol:

WILSON

Keystone

Slam him?? C'mon, that's an exaggeration. Peace.
:cheers:

corvetteseller

FatherLarry99Hardtop:
#1 In leasing a car/truck you MUST be comfortable with the procedure, or
you should buy. It obviously isn't something you are comfortable with, but I also feel that you have a very biased view of leasing, possibly based on personal experience with dealers of less than ethical standards. It really makes
no difference to us whether you lease or buy, we present both with full dis-
closures. You pick what fits your personal situation and comfort level.

2. You know your purchase price, you know your trade value, your know
your trade difference. My experience has shown no difference in insurance
costs. Yes, lessors require that you have a minimum liability of $300,000.
If you don't now....your first call should be to your insurance agent.

The reason for the required minimum is that the lessor's name is on the title;
should you get sued over operation of the vehicle, they also get sued. The
lessor has a blanket policy on their leased vehicle, with that amount being the
deductible. Rest assured that they will be there with their attornies to help
defend the suitl.

Tax structure in Texas and Illinois are unfavorable to leasing.

3. It you lease a vehicle with a "Manufacturer supported lease program" you
may not get the retail rebate, true. But, a supported lease may offer a lower
rate, higher residual, etc., achieving the same effect as a rebate.

We also advertise a low lease payment on a base coupe, which does require
a substantial Capitalized Cost Reduction. The purpose of advertising is to
get attention. The individual deal must be structured to the customers
personal situation/wants/goals, etc.

A lease provides a know end point with guarantees at the time of purchase.
If one were to lease and then buy at the end of the lease, the costs incurred
to hold free and clear title to the vehicle would be much more than purchasing
from the start. That is covered above.

4. Leases DO NOT limit you to 10-12,000 miles per year, I personally have
done leases for up to 40,000 miles/year. Again, this goes to structuring the
lease to the customer and his/her situation.

5. You are required to perform normal scheduled maintainance, as you would
with any vehicle under requirements of the warranty.

6. All factory equipment must be on the vehicle when returned, it must be
operational. "All tires must match", that statement defies comment.

7. Gap Protection (it is not Insurance) is automatically included in GMAC and
many other leases, don't leave home without it. If your vehicle becomes a
total loss, the liability for the payoff is not your responsability.

8. Getting out of lease early. This is dependent on market conditions, you
will often be "upside down" getting out of a financed car too early. AGAIN,
this goes directly to tayloring the lease to the customer's trade cycle.

9. Excess miles do incure a charge, if your exceed what you contracted for,
you have "used more" of the vehicle. If you buy and trade in a vehicle, it is
worth less with 50,000 miles than with 30,000 miles.

10. People trade purchased vehicles every day on which they owe more than
the ACV (actual cash value), if you cannot affort the payments to guarantee
an positive position at your normal trade cycle, then you can't afford that
vehicle. With a lease, structured to your personal situation, you know that
they worst thing that can happen at lease termination, taking normal care of
the vehicle, is to break even and walk away. Many, about 40%, of the people,
prefer it that way, or are able to enjoy a tax advantage by leasing; others just want to get into more vehicle at the same payment as purchasing a lesser
vehicle, or a given vehicle for less on a monthly basis.

Bottom line is: if you are not comfortable with leasing your vehicle, buy. If
you get a warm, fuzzy feeling by holding a free and clear title in your hand, buy. If you don't trust the dealer, find another dealer; as he will rip you off
whether you lease or buy.

**

FatherLarry99Hardtop

Thank you for backing my opinions with your last paragraph. As far as a dealer being on this forum, I know you have every right to. But, my feelings towards a dealer being on a forum for Corvette enthusiasts, is that they here to gather information on what the consumer wants, and how much they actually want it. And, then let the games begin, if you know what I mean. It's just like a lion watching carefully for his prey. I feel there should be a separate forum for dealers, so consumers can discuss things freely without a reprimand from the dealer (big brother watching). I had gathered from other posts on this site, that I am not the only consumer who has had bad experiences buying from or working for dealers. I wasn't trying to bash, but just inform. If you want to talk to consumers to tell them how great a product is that you are offering, go to the link below. And, if anyone here is interested in how salesman and consumers relate to each on this website, then check it out. beathecarsalesman.com

HummelS

I don't intend to "slam" the poster - much of what he says about leasing is true if you don't understand leasing, and if you let financing become part of the initial purchase negotiation.

BUT (a big "but"): not everything he says about leasing is true if you understand some fundamental principles about car deals - (1) NEVER go for the "monthly payment" negotiation technique at the dealer, whether you're leasing or buying. (2) ALWAYS negotiate the selling price of the car FIRST. (3) Now you can discuss what your trade in might be worth. You have established what you're going to pay for their car, now you can discuss how much yours is worth to them. Don't go on to step 4 until you've done this. (4) NEVER go to the dealer without having some competitive third-party financing quotes, whether you're leasing or buying. The car sales dude/dudette does not care where you're getting the money, the finance dude does. You're negotiating the selling price with the CAR sales dude. Whether you lease, pay cash, or get bank financing is of NO relevance to the discussion about how much you're going to pay for the CAR - don't EVER let them bring financing into the discussion. EVER. Period, end of statement. If you're pre-approved for financing of any kind, tell him/her you are paying cash - in effect, you are.

(5) One size does not fit all. I'm sorry, but imho, paying cash for any car you expect to get rid of in 2-3 years does not make sense to me, personally. Your mileage my vary, depending on your personal situation, opinion, whatever - just don't tell me in effect that I'm stupid to lease a new car - I'm not. I'm very happy with the terms of our leases, and on the selling price we paid for the C5's. Over the term of the lease(s) I will spend $1800 on sales tax (each) instead of $4000 (each). Down payment? Nil, so my money's still invested. Please tell me again why "buying" a new car is such a great deal compared to leasing. (I expect to walk away at the end of term an climb into another new Corvette - I'm not keeping this one for posterity, just using it for 3 years.)

PAGJA

..you are right-on Steve with your view on "Leasing"...What's the difference if you purchase the car outright, pay the full tilt on sales tax, etc., and then be subject to $500.00 +/- depreciation each month??? If you are lucky, the "residual" value at lease-end will be a couple of thousand higher than "book" value...which means that your "lease depreciation" is less than if you had actually purchased the vehicle and were trading it in...There are essentially three aspects to leasing...CAP COST (the agreed upon purchase price - less any down-payment), THE INTEREST RATE/or MONEY FACTOR, and the anticipated RESIDUAL VALUE (value projected of the vehicle at Lease End). Finally, the last step of the process is to figure the State Sales Tax for the period of the Lease. If you take the agreed upon CAP COST less the RESIDUAL VALUE at the end of the Lease Term, this will give you the amount of "lease depreciation" to be divided by the number of months of the Lease. Then apply the interest rate/factor for the total amount of the vehicle (which is usually based on MSRP less any down-payment) and divide again by the number of months of the Lease. And the final step would be the State Sales Tax, again divided by the number of months of the Lease. THREE SIMPLE ITEMS AND YOU KNOW WHERE YOU ARE AT ALL TIMES WHILE NEGOTIATING WITH THE DEALER... After you get the Three numbers combined...you can then make an evaluation if you would be better off to purchase or lease. Remember, it could be said that you are "renting" the car, however, if the "renting/lease" rate is actually under the normal monthly depreciation if you would own the car (and C-5 Corvettes lately have been depreciating over $600 - $700 a month), I would say that it is a much better investment to Lease vs. own. Also, at least you don't have to go through the hassle of "trading" or "selling" the car when the time comes. I had leased a '98 C-5 and the residual and buyout number was $5,000. under what book value was at the Lease end time.... and my lease payment was approx. what the normal monthly depreciation was at the time had I purchased the car. I had cut a check to the dealer and then they purchased the vehicle from the leasing company (this way I didn't have to pay the sales tax on the buyout), and I traded it on a new 2001 .... I got the benefit of the extra 5,000 against the 2001.... current residual values today are more in-line with depreciation that you would see if you had purchased the car outright, however you still get the sales tax advantage and the fact that you don't tie-up tens of thousands of dollars on a depreciating asset.... to figure what "money-factor" is as related to "interest rate" take the money factor number quoted to you and times it by 2.200 ....this will give you the actual simple interest rate...If you are prepared when you go into a dealership, they will quickly realize that you are very knowledgeable on Leasing and will cut the bull---- very quickly. They actually enjoy dealing with a customer who knows as much as they do...in some cases maybe more! I no longer even go into the dealership...simply use the fax machine requesting quotes,etc. thru the Fleet Sales & Leasing Dept. Sales Mgr......TRY IT, IT WORKS!!!

corvetteseller

Great comments, Steve and Pagja.

I know that I would rather deal with informed buyers/leasors who have an
open mind to negotiate the deal, and then consider all their ownership
avenues, and then choosing that which makes the most sense in that
persons personal situation, be it cash, finance, or lease.

LTC Z06

Don't lease a sports car man, in the book "The Millionaire Next Door" they advise not to lease.
Prost :cheers:

HummelS

Guess speedy pulled his post - nevermind, here's mine:

I know I'm renting the car. That's the point, dude. If you think you're buying something of value by paying cash for a C5, go talk to the people who did that a year ago, only to see the value of their C5 "investment" drop by 25% overnight when the economy went to hell in a handbasket. That's in addition to the "normal" depreciation.

There's nothing wrong with "renting" something you know will depreciate in value - a lot of people will tell you it's a smart thing to do.

Oh, and by the way, the next argument I'll get is that people who lease their cars don't care, and don't take care of them: I'll invite your inspection of my car, any time, any place. And - by golly: all four of my tires match... (wtf was THAT statement about? - would YOU drive a ''vette with mismatched tires???? [sarcasm] Boy, it would be pretty onerous to have to meet that condition when I turn the car in...[/sarcasm] :rolleyes:

Also, thanks to Bob Benedix (one of the "good guys") for some of the insightful comments on the process... it all comes down to what Bob said - if you don't understand leasing, don't do it, 'cause you're likely to get screwed. If you spend a little time getting up to speed, you'll discover that it's not a "BIG rip off" - it's an alternative that sometimes gets used by dealers to rip people off. There IS a difference.


[Modified by steve hummel, 11:27 PM 10/28/2001]

FatherLarry99Hardtop

This is the point I am trying to make. The more you know, the better leverage you have. I am glad I posted what I did, because it has brought out some valid points. I think too many people who no nothing about leasing can get themselves in trouble. Leasing seems to have become a popular option for many consumers, therefore, dealers will take advantage of that. Knowledge is power, and if my post made some people at least THINK about it and research it more, then something was accomplished.


[Modified by FatherLarry99Hardtop, 2:00 PM 10/29/2001]

PAGJA

...well stated Father Larry...A terrrific subject on the aspects of leasing vs. buying....by the way, I see you are from Allentown, PA (Same as me)...keep up the good subject matter....PAGJA :seeya