Automotive

# Lease or Finance a car - are you getting scammed??

• Last Updated:
• Dec 21st, 2013 5:17 am
Tags:
SCORE
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[OP]
Newbie
Jan 31, 2013
3 posts
Richmond Hill

## Lease or Finance a car - are you getting scammed??

I was buying a car the other day but the dealership tried to rip me off.

When you lease/finance - do you recalculate the interest rate?
If you don't check the rate, the interest rate the dealer is giving you might not be the rate you are actually paying.

Example:
You negotiate to buy a car - cost is \$25,990 + freight \$1828. At 2.99% interest over 4 years the dealer says that’s \$361.53 with a \$12,962 buy back.

RULE OF THUMB: Negotiate on the Total cost, not the monthly payment.

You negotiate it down to \$24,000 - pretty good deal. Interest rate is 2.99 % for 4 years. Your lease payments are now: \$340 per month.

How do you know the \$340 is correct? How do you even know how the \$361.53 is correct?

You probably don’t. You need to calculate it. The correct answer is if you negotiate it to \$24,000, the monthly payment should be: \$307.59.

I’m probably confusing you - all I’m saying is DON’T TRUST the monthly payments they give you. Let's calculate.

What I do to check the monthly payments in a calculator - try: http://www.calculator.com/pantaserv/lease.calc

Take the information from the quote:
- FINAL NEGOTIATED PRICE (\$25,828 = 24000+1828 freight)
- DOWN PAYMENT (\$2,000)
- TRADE IN VALUE (\$0)
- SALES TAX (13%)
- LENGTH OF LEASE (48 month)
- NEW CAR LENDING RATE (2.99%)
- BUYOUT VALUE (\$12,962.45)

- enter that in the online calculator. What does it give you: \$307.59

So using what the dealer gave us: \$ \$340.00

Payments should be \$307.59 per month. which would give a difference of \$1,555.68 over 48 months. In essence they are giving you a 4++ % interest rate, rather than the 2.99% agreed on.

WHEN AT DEALERSHIP
So what you need to say is -
a) The payments don’t make any sense. They should be LOWER. Show them the online calculator.
b) be very careful when at the dealership they add “other charges” to the FINAL NEGOTIATED PRICE. They tried that with me.

So this is probably way too much numbers. Key is - you’d save yourself \$1,555.68. Be careful of the scammers out there. Both a domestic dealer and international dealer tried to screw me, I had to explain to them the numbers.

GOOD LUCK! HOPEFULLY THIS HELPS. CHECK THE NUMBERS!
26 replies
Member
May 11, 2011
324 posts
Toronto
I hope you're not doing the simple +2.99% on top of the final price to determine the interest.

It's not a simple interest.
Jun 10, 2011
1758 posts
THORNHILL
This is RFD buddy, we buy at cost and if the dealer even thinks about screwing with us we make a "Beware" thread warning others. FTW
Penalty Box
Feb 7, 2010
1355 posts
Toronto
OP needs to learn compounding interest..........
Jan 8, 2007
2022 posts
Calgary
caredog8 wrote:
Dec 10th, 2013 10:26 pm
I was buying a car the other day but the dealership tried to rip me off.

When you lease/finance - do you recalculate the interest rate?
If you don't check the rate, the interest rate the dealer is giving you might not be the rate you are actually paying.

Example:
You negotiate to buy a car - cost is \$25,990 + freight \$1828. At 2.99% interest over 4 years the dealer says that’s \$361.53 with a \$12,962 buy back.

RULE OF THUMB: Negotiate on the Total cost, not the monthly payment.

You negotiate it down to \$24,000 - pretty good deal. Interest rate is 2.99 % for 4 years. Your lease payments are now: \$340 per month.

How do you know the \$340 is correct? How do you even know how the \$361.53 is correct?

You probably don’t. You need to calculate it. The correct answer is if you negotiate it to \$24,000, the monthly payment should be: \$307.59.

I’m probably confusing you - all I’m saying is DON’T TRUST the monthly payments they give you. Let's calculate.

What I do to check the monthly payments in a calculator - try: http://www.calculator.com/pantaserv/lease.calc

Take the information from the quote:
- FINAL NEGOTIATED PRICE (\$25,828 = 24000+1828 freight)
- DOWN PAYMENT (\$2,000)
- TRADE IN VALUE (\$0)
- SALES TAX (13%)
- LENGTH OF LEASE (48 month)
- NEW CAR LENDING RATE (2.99%)
- BUYOUT VALUE (\$12,962.45)

- enter that in the online calculator. What does it give you: \$307.59

So using what the dealer gave us: \$ \$340.00

Payments should be \$307.59 per month. which would give a difference of \$1,555.68 over 48 months. In essence they are giving you a 4++ % interest rate, rather than the 2.99% agreed on.

WHEN AT DEALERSHIP
So what you need to say is -
a) The payments don’t make any sense. They should be LOWER. Show them the online calculator.
b) be very careful when at the dealership they add “other charges” to the FINAL NEGOTIATED PRICE. They tried that with me.

So this is probably way too much numbers. Key is - you’d save yourself \$1,555.68. Be careful of the scammers out there. Both a domestic dealer and international dealer tried to screw me, I had to explain to them the numbers.

GOOD LUCK! HOPEFULLY THIS HELPS. CHECK THE NUMBERS!
That's a pretty big discount on a car that's 25,000. Either way, something doesn't look right. If you indeed got them down in price \$1990 and you put down another \$2000 and there are no other fees just freight of 1828, you're right your payments should be as you say. I'm guessing there was some sort of miscommunication somewhere along the line. Them trying to scam like this would be fraud as their software is hard wired to spit out correct numbers.
Aug 12, 2007
2346 posts
Waterloo
caredog8 wrote:
Dec 10th, 2013 10:26 pm
Example:
You negotiate to buy a car - cost is \$25,990 + freight \$1828. At 2.99% interest over 4 years the dealer says that’s \$361.53 with a \$12,962 buy back.
Ive never leased a car so I'm not sure how it works.

What's a buy back ? If you're leasing a car for say 4 years, doesn't it remain the property of the financier anyways?
Jun 10, 2011
1758 posts
THORNHILL
Supahhh wrote:
Dec 11th, 2013 11:14 am
Ive never leased a car so I'm not sure how it works.

What's a buy back ? If you're leasing a car for say 4 years, doesn't it remain the property of the financier anyways?
Depending on residuals, you always have an option for buying back a lease if you wish. You have to go through the process of buying a used car. I.e. certify and safety it. Plus you have to pay HST and various admin fees. More often buying back a lease is never a good option.
Jul 18, 2009
1963 posts
I'll bite.

Can anyone help me calculate this? Any online calculators I use don't really come close.

91, 898.45 OTR
20, 000.00 Down
33, 436.00 Residual
1.9% Rate

4 Years * 12 Payments

The payment shows \$903.85/mo

Is that correct?
Deal Expert
Jul 30, 2007
20158 posts
Toronto
no worry. right or not. You are going to forget these #s and have a blast with your car.
Jul 18, 2009
1963 posts
Dec 11th, 2013 11:26 am
no worry. right or not. You are going to forget these #s and have a blast with your car.
When you have to wait so long for a car I think you go crazy.

2 months already, 2 more left.
Deal Expert
Jul 30, 2007
20158 posts
Toronto
^ it will go fast. I see you have stockpiled a fair amount of mod parts already.
Jul 18, 2009
1963 posts