10 Hidden Costs & Extra Fees To Watch Out For When Leasing a Car

9. Administrative Costs

When it comes to leasing a car, most car dealerships will hit you up for administrative fees twice – once when you initially lease the car and a second time when you return the car. In both instances, the administrative charge runs between $500 and $750. This cost is, apparently, for the administrative staff at the dealership to process the paper work related to your lease. And while most people are not surprised to see an admin charge when they initially take out the vehicle lease, most people are quite shocked to be hit with an administrative charge a second time when they turn the car in at the end of the lease period. Especially as the administrative charge can be much higher the second time than the first. After all, $700 in administrative costs to cancel a lease, seems pretty steep to us.

http://www.newcarselloff.com/content/car-leasing-back-canada/ Via newcarselloff.com

8. Termination Fee

Have you lost your job? Gotten ill? Been transferred with work and need to move? Are you retiring or downsizing? Any and all of these developments would be legitimate reasons for you to get out of your lease early. But don’t try and tell that to the car dealership. Because if, for any reason, you need to terminate a lease before the term end date, you will be hit with a termination fee. How much is the termination fee? It varies but it often ends up being the full remaining amount on a lease. Many a person has terminated their lease early, only to find that they are on the hook for the full cost of the lease anyway. If you find that you need to get out of a lease early, visit a website like Leasebusters, which helps people find someone to take over their lease. Also, ask the car dealer about what’s known as “Walkaway Protection,” a form of insurance that lets people get out of a lease early without paying penalties. A select few car dealers offer Walkaway Protection free in the first year of a lease agreement.

http://leasebusters.com/noflash_redirect.html Via LeaseBusters.com

7. Mileage

Most leases enable people to drive 12,000 to 15,000 miles per year. Although some leases have mileage limits set as low as 10,000 miles per year. Regardless, if you go over that set amount, you will pay handsomely for it. Typically, the charge for each mile over the limit is 10 to 20 cents per mile. That may not sound like much, but it adds up in a hurry. For example, if you drive 18,000 miles instead of the set 15,000 miles in each year of a three-year lease, at 20 cents for each additional mile, you’ll owe a whopping $1,800 at the end of the lease (9,000 miles’ x 20 cents per mile). That’s equates to an extra $50 a month over the duration of a lease period. Extra mileage is where most car dealers make their money on leases. Truth is that they set the mileage limits so low that it is nearly impossible for most people to remain under the annual limit.

http://sevenstorylearning.com/sales/marketing-case-study-high-mileage/ Via sevenstorylearning.com

6. Auction Fees

Should you have the misfortune of going over the mileage limit on your lease, the dealer could tell you that they have no choice but to sell the car you returned at auction. The dealer may then tell you that you are responsible to cover the difference between what the car sells for at auction and the initial value of the car that they calculated based on you staying within the annual mileage limit. The car dealership calculates that the car you lease will be worth a certain amount of money at the end of the lease period – say $13,500. This is based on you driving, say, 12,000 miles a year. If you drive more than 12,000 miles per year, the dealer will then decide that the car is no longer worth the estimated $13,500 it calculated and move to sell it at a vehicle auction. If the dealer gets $10,000 for the car at auction, it could then come back to you and say you owe the difference between the $13,500 it initially estimated the car value at and the $10,000 recovered at auction, which would leave you on the hook for $3,500. Not good.

http://direct2you.ws/staticpages/index.php/0017-Online-Auctions-For-All-Vehicles Via direct2you.ws

5. Down Payment

One of the biggest things car commercials overlook when peddling car leases is the initial down payment required. Few ads that promise a weekly lease payment of only $59 mention that most leases require an initial down payment – and often a hefty down payment at that. Some lease down payments are as high as $5,000. The down payment requirement is often hidden in the fine print of a lease agreement, and it is also referred to as a “capitalization cost” in many instances. And, the larger the down payment, the lower the monthly lease payments. However, when calculating the true cost of a lease, one should always factor in the down payment. If you have a three-year lease and put a $5,000 down payment on it, then be sure to divide $5,000 by 36 months and add $138.89 a month to your lease payment as that is the true cost of the lease.

http://www.dealerstrong.com/increase-gross-profit-and-down-payment/ Via DealerStrong.com

4. Fees, Fees and More Fees

By this point, you may think that we have covered nearly all of the fees associated with a lease. Not even close. In addition to the fees we have already mentioned – both obvious and not so obvious ones – there are many other fees that can be found within the fine print of a lease. These include acquisition, documentation, purchase option and disposition fees, to name a few. Acquisition fees are charged at the start of a lease and typically run about $500. A disposition fee is charged when you return a car at the end of the lease and it covers the cost to dispose of the car. Disposition fees tend to run between $300 and $600. And a purchase-option fee is the amount it will cost to purchase the car at the end of the lease, and that amount can be $10,000 or more. The bottom line is that all of these one off fees add up and get real expensive, real fast. Oh, and don’t forget the registration fee.

http://classroom.synonym.com/acquisition-fee-auto-loan-19835.html Via classroom.synonym.com

3. Wear and Tear

Any vehicle that is driven for three years or longer is going to experience some wear and tear – no matter how good a driver the owner happens to be. Little nicks and scratches on the body of a car are to be expected. Unless, of course, you are leasing a car. In that case, you can expect to be charged a lot of money for every little nick, scratch of other imperfection in the vehicle you leased. And this includes the interior of the car as well as the exterior. Any salt stains, juice stains or worn fabric will come back to haunt you in the form of a hefty cleaning bill. While most car dealers will tell you at the outset that you will not be charged for what they call “fair wear and tear” and will only be charged for excessive damage to the vehicle, trust us when we say you will pay for every tiny nick and scratch. Even the fees to clean the car after you return it will seem excessive. This is all gravy to the car dealers.

https://justclueless.wordpress.com/tag/how-to-fix-car-scratches/ Via justclueless.wordpress.com

2. Security Deposit

Sticking with the issue of wear and tear for the moment, keep in mind that most car dealerships require that people put down a security deposit when leasing a vehicle. Also keep in mind that it is at the dealer’s discretion whether they refund that security deposit. Security deposits tend to range between $500 and $1,000. And while you might assume that you will see that money again when you return the car you leased, many a dealer has kept the security deposit or only refunded part of it claiming that the vehicle is excessively worn or has been damaged by you while you drove it. Best thing to do is ask some people you know who have leased a car if they got all or any of the security deposit back on their lease. You may be surprised by the answer.

http://twocents.lifehacker.com/how-to-make-sure-you-get-your-security-deposit-back-1604938030 Via twocents.lifehacker.com

1. The Money Factor

This is the biggest bitch of hidden lease fees. Here is how the infamous “money factor” works. The money factor is tied to the interest rate charged on a lease and is expressed as a decimal — let’s say .00260. A dealer might tell you that the lease has an interest rate of 2.6%. But then they apply the money factor of .00260 to the calculation. You might think that you are still paying 2.6% interest on the lease. However, with the money factor of .00260 added to the equation, the interest rate actually comes out to 6.24%. And an interest rate of 6.24% is a hell of a lot higher than 2.6% – nearly two and a half times higher to be exact. Always watch the money factor, it can screw you if you are not careful.

https://cartified.com/blog/shady-car-salesmen-dont-want-you-to-know-this/ Via cartified.com