Although lower monthly payments make auto leasing appear to
be an attractive alternative to financing the
purchase of a car, the technical and complex
language, and the greed of some car salesmen,
cause car leasing to be an option that is
fraught with many pitfalls for the average
consumer. The Attorney General of Florida has
received almost 3,000 complaints from consumers,
many of whom have been pressured into auto
leasing, not been credited for their trade-in
vehicle, or have complained of being defrauded
in other ways. Be aware that once you sign a
lease, you have no legal right to cancel. Before
entering into an auto lease, consider the
TIPS FOR CONSUMERS
What is a Vehicle Lease?
A lease is a long-term rental agreement. You are
paying for the right to drive a vehicle for the
term of the lease, but you do not own it. In
most instances, you will be responsible for all
maintenance on the vehicle, and your insurance
rates will usually be higher.
Isn't it a good deal if my monthly payments are less than if
I purchased the car with financing?
Not necessarily. The monthly payments should be
significantly less because you don't own the
car. Your monthly payments are based upon the
CAPITALIZED COST or "Cap Cost." This is just
fancy terminology for the price of the car.
The lower the cap cost, the lower your
monthly payment. Cap cost may be the same as
the STICKER PRICE of the car, but you can
negotiate for a lower cap cost, just like
you can to buy it, so don't be afraid to
shop around. The cap cost is reduced by the
amount of cash or trade equity that you put
into the deal that exceeds inception and
acquisition fees. The correct amount of
credit for your trade-in should be
indicated. If manufacturer rebates or dealer
coupons are offered, such credit should also
reduce the cap cost. Your total credits
should be specified.
MONEY FACTOR. This is a fancy term for
"interest rate." The lower the money factor,
the lower your monthly payment. The money
factor will usually range from .0021 to
.0046. Ask the dealer to put your money
factor in writing. Then you can multiply it
by 2400 to calculate the interest rate.
Remember that even the money factor is
What else should I know about leasing?
This law took effect on October 1, 1995, and all
leases must now provide you with certain
disclosures. You are entitled to copies of all
documents which you sign at the dealer
especially the lease contract which will contain
several very important terms. First, the lease
contract will be clearly marked as a lease.
Second, the price of the car or truck, with any
added options and costs, will be listed. Third,
your net trade-in value, cash, or rebate will be
listed. And fourth, the bottom line price of
what you are leasing will be indicated.
It is important for you to review these
disclosures carefully. Make sure that they
reflect what you negotiated with the dealer.
Many of the complaints which the Attorney
General's Office has received relate to
disclosures so please read the disclosures with