The phony lease-versus-buy comparison. To make lease payments look more attractive, the salesman compares them to loan payments that are based on a shorter term than most buyers typically choose. (Most buyers choose 5-year loans, but salesmen often use 3-4 year loans in their comparison because the payments are higher.) Also, the higher costs of car insurance and registration fees related to short-term leasing are conveniently left out.
The “down payment” trick. Down payments are often used in leasing to make a bad deal look good. On a lease, a down payment is just monthly (rental) payments in advance, it doesn’t reduce the residual or purchase option price. Salesmen often equate down payments on leases with down payments on purchases, but only on purchases do they build any equity.
There is no purchase price on a lease. This dishonest statement has been used by many salesmen after their customers asked, “What price am I paying for this car?” The purpose: to prevent disclosing the cap cost and to hide secret price increases.
The secret price boost. After you negotiate a lower purchase price on a vehicle, the salesman switches you to alease with a higher cap cost than the negotiated price. (This is known in the industry as “the flip,” and salesmen have been offered bonuses to flip buyers into leases.)
The cap cost has no effect on your payment. Another dishonest statement that’s been used by salesmen after they were caught using higher cap costs than the prices that were previously negotiated (or quoted).
There is no interest rate on a tease. This dishonest statement is used to hide the actual interest rate being charged on a lease. (No rate disclosure in the contract.)
The secret APR boost. The salesman quotes you a lower interest rate for a lease, then writes up the contract based on a higher rate. Since there’s no rate disclosure in the lease contract, you don’t know it’s been increased.