How Dealerships Sell a Lease

Dealerships can have big affect on how consumers finance their vehicle purchases and what they pay for that auto financing by providing the car financing options right at the dealership floor.  The car dealerships do not however directly finance cars they sell or lease.  The dealership simply offers car loans and car leases from third party providers which may include the car manufactures financing division or a local bank. 

Dealer financing can come in the form of a car loan or a car lease.  The auto dealer is not the finance company determining the lease approval; they cannot approve customers for leases.

Leasing is when a person has access to a car in exchange for a monthly payment.  At the end of the leasing term, one can give the car back to the dealership without any further financial obligation or buy it at a lump sum.  While some car owners balk at the thought of doing it, others are delighted at the concept.  For them it gives them an opportunity to drive the latest most expensive vehicles without the commitments normally associated with owning a car and having a car loan.

However, even lease lovers need to be aware that leasing is no different than selling, at least in the minds of car salesmen.  They will still try to push for leasing arrangements that benefit their dealership more than the person leasing.  For this reason individuals interested in leasing, (and in some cases even those that aren’t), should know the common tactics many dealerships use to acquire more leasing agreements. 

Manipulating the Figures

Dealers are famous for playing around with the numbers on a leasing contract to make a person think they are getting a good deal.  However, it’s just a lure, since the numbers quickly change once the leasing arrangement has commenced.  And these changes are usually to the detriment of the person leasing. 

One way to avoid being victim to this is doing one’s homework before actually visiting the dealership.  Sites like Edmunds.com let people know ahead of time what they should expect when it comes to leasing costs.  There are even leasing calculators available that can provide further assistance to those making sure their lease is sound.  All of these resources need to be taken advantage of.  In fact, any figures generated need to be printed out and shown to the dealer when one is ready to negotiate a lease. 

Negotiating the Four Square Way

Dealers will use a simple yet often misleading method to try to lure people into bad leasing arrangements.  Basically, they will draw a cross on a piece of paper… this allows for four quadrants.  In each of these quadrants, the salesman will ramble on about the deals a person can get on various aspects associated with their leasing arrangement.  While the process looks enticing, it all boils down to one thing: a higher monthly payment.

Selling Leases to Car Buyers

Car salesmen will try to sell a lease even to a person that wants to buy if they think they have a hook with promoting a lowered monthly payment.  Occasionally car buyers may be signing a leasing agreement without even realizing it.

 ‘Legal’ False Advertising

Okay, it may seem like an oxymoron, but in the automobile industry, the term ‘legal’ false advertising isn’t.  What happens is individuals become interested in a lease because an ad will feature a leasing rate that seems extraordinary.  However, once a person signs their name on the dotted line, all of a sudden that rate is changed.  They must then have to hear a bunch of jargon and rhetoric on why this happened.

Whether a car buyer is looking for a car loan or a car lease, the prospective car buyer should always know their own credit history and credit score  before entering the showroom.  Car buyers should also always shop for their own car financing and get pre-approved for a car loan or lease before the negotiations begin on the car and car price.

When the dealer controls the numbers, all the car buyer will see is that end result car lease monthly payment.  By viewing other options for car financing in advance you will be able to check the dealer’s lease payment figures to make sure there are no unusual charges or that the lease cost is higher than what you can obtain elsewhere.

Tags: auto financing, car financing, car lease, Car loan, credit, lease, loan

This entry was posted on Wednesday, June 17th, 2009 at 12:21 pm and is filed under Articles. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.