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Month: October 2019

How To Lease A Car And Not Get Ripped Off

A few days ago, I leased a 2019 Chrysler Pacifica Touring L. It’s the fourth car I have leased over the past 10 years. Leasing will cost a bit more in the long run compared to buying one car and driving it into the ground, but as our family is growing, we have needed a bigger car every few years. And I love that with a lease you really don’t have to worry about routine trips to the mechanic. When I was younger, I had so many shitty cars that would eat up thousands of dollars every few months and it was so so painful.

For most leases, you return the car after 36 months, which is right around time some major things usually need to be repaired. We are returning a 2016 Nissan Rogue to the dealer on Monday. It has 48,000 miles on it. It needs four new tires very soon. It needs new brakes very soon. But I don’t have to pay for that. When an inspector came to check the car out a few weeks ago, he said I wouldn’t owe any money for excess wear and tear when I turn the car in.

I will, however, get a bill for about $950 bucks a few months after I turn the car in. You get a certain amount of miles per year with a lease and ours was for 15,000 a year. Each extra mile costs 15 cents so we will owe about $450 in over mileage charges. We will also pay a $395 disposition fee to Nissan. You pay a disposition fee whenever you return a lease and don’t lease a new car from the same company. This will be the first disposition fee we pay as our first three leases were all Nissans, but with kid No. 3 coming soon, we wanted a minivan and Nissan doesn’t make one anymore. We will also be charged because I’m an idiot and lost one of the keys.

So putting aside the mileage and lost key charges, it will cost $395 to give back the Nissan. But we make that back and some because Chrysler took $500 off the minivan price because we had a current lease with another company and were switching to them. Many car companies offer an incentive like this.

Here’s the thing about leasing: it is very, very easy to get ripped off if you don’t do your homework. About 10 years, I walked into Atlantic Nissan in West Islip, N.Y. with the intention of just browsing. But I almost gotten eaten alive. I had just gotten a new job. I had been driving around my Dad’s Nissan Quest minivan. To a salesman at Atlantic, I looked like a gazelle with two broken legs and they were the lion about to rip me apart.

My first big mistake: I knew I wanted a Nissan Altima, but I had no idea how much it should cost and I certainly had no clue how much it cost per month for a lease. A salesman jotted down some numbers on a small piece of paper and 20 minutes later, I agreed to pay $299 a month to lease and Altima. I signed the little paper and was feeling great. I had no idea there was a finance office at every dealership where numbers can change very quickly.

Even though my credit score was great, the finance guy told me that since it was my first car, I couldn’t get the lowest interest rate on the lease. This was a lie. He told I would need to make a $3,000 down payment. I was still very ready to sign the lease contract, but I wanted to give my car expert uncle a ring first to make sure I wasn’t get ripped off. He said run, don’t walk out of there. So I did. I needed to come back a day later and fight with Atlantic to give me back the $200 deposit I had left on the car before I had gotten to the finance office.

I ended up leasing the Altima at another dealer for $275 a month with just $600-700 down for the first month’s payment and DMV fees. I still wasn’t sure it was a great deal. I just knew it was a lot better than Atlantic and I just wanted the process to be over and into a new car.

Fast forward three years later, I’ve know done my homework. I’ve figured out a money factor is. I’ve learned what net capitalized cost is. There are a bunch of lease terms that you need to understand if you don’t want to pay more than you have to when you get to a dealership. The most important thing I Iearned, though: never walk into a car dealership planning to buy or lease a car without getting a set price either via phone or ideally, email.

For my second lease, I got a price via email after emailing several different Nissan dealerships on Long Island. When I got to the dealer, it was all smooth sailing until I got back to the finance office. Suddenly, there was a $2,400 random charge on the lease contract. I told the finance guy I wasn’t paying that. He didn’t explain what it was. He left the room for 10 minutes and when he got back, the charge was gone and I signed the contract.

My third lease, another Nissan, I got prices mainly over the phone and I made the dealers compete for my business. I would just tell them, XXX dealership is giving me this price, can you beat it? I did this until dealerships started saying they couldn’t beat it. Then I went in and leased the car. It was smooth sailing the whole time once I got to the dealership this time.

Now we get to the lease I just signed a few days ago. This time around I noticed something different. Many dealers were reluctant to send prices via email. Even when I specified I just wanted a price and told them the exact vehicle I wanted, they would avoid the question and ask me when I could come down to the dealership to take a test drive.

I would say of the 12 dealerships I emailed, only 5 sent a price via email. The dealership I ended up leasing from wouldn’t send one. I prefer email price quotes because then you can print it out and bring it to the dealer. But in this case, I said fine, I’ll talk to a sales manager on the phone. When they called, I never got past the internet sales representative. She put me on hold for a few minutes and came back with a per-month price. In the low-400s, she said. I know her manager didn’t want her to say a specific figure, but I pushed and got her to say “$410ish and possibly lower if you quality for certain rebates when you get here.”

I knew this was a good price as the one other quote I got on the Pacifica was $510 a month. At the start I had been getting quotes on Honda Odyssey’s, but the rumors I heard about them not leasing well were true. Every dealer came back with a price between $460-480 a month.

So I headed down to Security Dodge Chrysler in Amityville on Thursday morning with my wife and 3-year-old son hoping to leave with a new minivan at the price I was quoted on the phone. Things started out rough. The internet saleswoman I was supposed to ask for when I arrived wasn’t even in the office yet. So I had to explain to a salesman that this woman had already given me a price over the phone and I was ready to get moving on the purchase.

The car we were leasing was down the block in another lot so the salesman drove me down there to take a lot at it. On the ride, I explained that I had come very close to being f’ed over when leasing before, but I knew my stuff now and I wouldn’t fall for any nonsense from him or in the finance office. I also told him that with a previous lease I had given the salesman a perfect score on the car company survey that is sent out to everyone who buys a car. I also told him I had given the finance guy all zeros because he had tried to screw me. These surveys are a big deal for car dealership employees.

When we sat down to talk business, I told the salesman exactly what the internet sales woman had said about a price, $410ish and possibly a little lower. The salesman went and spoke with his manager and came back with a small piece of paper and said “$410 was close.” I looked at the paper and it said $429.

Now the gloves were off. I said, look I just drove 45 minutes here with my wife and son because I assumed we had a deal set. I emphasized that the internet salesperson did not say, “It will be $410ish or possibly a little more.” In fact, she said the complete opposite.

So the salesman goes back to his manager. He comes back and just like that we are back at $410. I knew I had the leverage because I was leasing a 2019. Dealers want 2019s off their lots in October. Not only that but I had searched the inventory at this particular dealer and knew they had a dozen 2019 Pacificas getting dusty in their back lot. The salesman had even told me during our car ride that he couldn’t remember the last time he sold one.

The rest of the time at the dealership was smooth sailing. When I got to the finance office, I was in there for 5 minutes max. They didn’t try to pull any tricks and I’m pretty certain it’s because I had warned that I wouldn’t tolerate or fall for them.

There are many sites now, like TrueCar, that claim to be able to get you the best no-hassle deal on a car. I don’t buy it and neither should you. Dealers love TrueCar because people who walk in with a TrueCar certificate think they are getting an amazing deal and won’t negotiate any further, but really, the dealers are still making plenty.

You want dealers to compete for your business and not just the 2-3 that TrueCar claims are certified. You should get a price quote from 7-8 dealerships after you decide what car you want to buy. Ideally, get that price quote in writing and then confirm all the details again in writing before you even think of heading to the dealership. And stick to your guns once you get there. You can’t be afraid to walk away.

Dealerships love to keep you sitting around for hours. They get the insurance set up on your new car. Hell, I even got an email saying congrats on your new Pacifica before the contract was signed. They want you to feel like you already own the car so when they try to pull the wool over your eyes at the last second, you’ll be so excited to get behind that wheel that you will sign anything they put in front of you without realizing they are taking you to the cleaners.

If you are leasing a car, never give a down payment. You won’t save any money. You are just prepaying the lease. Tell the dealer you want to pay only first month and DMV fees out the door. Depending on the vehicle and what state you are in, this should come to around $700-$900. Most importantly, when you get to that finance office, they will have you first sign 30 things that really don’t mean anything.

It’s the last paper, the long contract that you want to study with a fine tooth comb. Make sure everything looks correct. If there’s a fee on there that doesn’t look right, ask about. Dealerships, again, are just hoping you sign quick because you are excited to get a new car. If something isn’t right and the dealer won’t immediately make it right, run away real fast.

 

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Why The Discover It Credit Card Should Be On Your Radar

As a general rule, I don’t sign up for any credit cards without a signup bonus worth at least $500. But the Discover it card is one of the rare exceptions.

Discover it has just a $50 signup bonus. You get that as a statement credit soon after you make your first purchase. The real value in this card comes from its Cashback Match. “After the first 12 consecutive billing periods that your new account is open, we will match all of the cash back rewards you’ve earned and apply them to your account in the following one or two billing periods,” the card application says.

The card normally gives 1 percent back on all purchases. 2 percent is decent, but there are other 2% cards out there where you get 2% immediately. Alright, I’ll get to the point: Discover has 5% cash back in rotating categories that change each quarter. This cash back is also doubled for the first year!

For Q4 of 2019, which just started, the 5% categories are Amazon, Target and Walmart.com. The 5% cash back applies to the first $1,500 of spending in those categories. I recently got this card and when the calendar turned to October, I immediately bought $1,500 worth of Amazon gift cards. If you are like me, $1,500 on Amazon goes very quickly during Christmas season. With the double cash back, I’ll get $150 back from Discover.

Discover hasn’t announced its 2020 categories yet, but this year, they were grocery stores in Q1, gas stations, Uber/Lyft in Q2 and restaurants in Q3. So the potential is there for $600 in bonus cash back for the first year you have the card. That’s in addition to 2% percent back on all regular spending.

You can cash out bonus $ directly to your checking account. Discover also lets you redeem for gifts and they often have great deals on them. For example, right now they have a special where it’s just $20 in rewards for a $25 Applebee’s gift card.

The last great thing about this card (but one you obviously need to be careful with), there’s no interest on purchases or balance transfers for 14 months. The length of time for both purchases and transfers is very rare.

There’s no annual fee so this one worth getting and keeping for the long haul. After the first year, though, I would only use it in the 5% categories as you should always be doing better than 1% on everyday purchases.

Apply for the Discover it card here.

 

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