The disappearing trade-in. After negotiating a price on your trade-in, the salesman fails to credit the full amount in the lease—or he just increases the cap cost to cancel out part of the trade-in. Sometimes none of the trade-in amount is credited. This is known as a “home run.

The disappearing cash down payment. After talking you into putting additional cash down to lower your monthly payments, the salesman fails to credit the full amount in the lease—or he just increases the cap cost to cancel out part of the down payment. Sometimes none of the cap reduction is credited. This is also known as a ‘home run.
You don’t pay for the whole car, only the part you use.

This dishonest statement is used to convince you that leasing is cheaper than buying. The salesman fails to
mention that you will be paying interest on the whole car not just “the part you use, and the total interest you pay on a lease will be a lot higher than it would be on a loan at the same terms.

“No money down” advertising. Ads say that you can lease with no down payment, but lease companies almost always require the first month’s payment and a security deposit, in addition to tax, license, and registration fees.
The future value of the vehicle is guaranteed. This little trick is often used to hide the fact that the residual or purchase option price has been inflated. In other words, the vehicle will be worth less sometimes a lot less than the residual at the end of the lease.

Deceptive advertising. Low-payment ads are run for leases that require large down payments and/or trade-ins. Also, advertised prices are often limited to one vehicle, or they only apply to stripped-down models.

The phony “investment earnings” claim. Salesmen often use hypothetical investment earnings on the “initial cash savings from a lease” to make it look better. Since so many people who lease low-to-mid-priced vehicles are leasing because they can’t afford higher loan payments, the “investment earnings” claim is phony because most people won’t have anything “left over” to invest.
The dishonest “financing is cheaper” program. Some salesmen have talked all-cash buyers into leasing after using a dishonest computer program to “prove” that financing is cheaper than paying cash. It isn’t. (About 5,000 dealers in the U.S. purchased this program.) Even when below-market financing is available, it’s almost always
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offered instead of a (cash) customer rebate, so it might only be a bargain if you intend to borrow a lot for a long time (which isn’t smart, anyway).
Inadequate disclosure. Failing to disclose any of the following in writing: cap cost (purchase price), cap reduction, trade-in, residual, monthly payment, total finance charges, interest rate, allowable mileage, excess mileage charge, acquisition and disposition fees (if any), total due at lease signing, purchase option price, and explanation of termination penalty.

NOTE TO LEASE VICTIMS
If you think that you were victimized by any of the tricks described in this chapter, be sure to read “Note to Victims of Leasing Fraud” on the Summary page. It will explain what you should do if fraud was involved to cheat you on a lease.

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.