Top 10 leasing booby traps

6. Price-doesn't-matter pitfall

Don't believe that because you're leasing, rather than purchasing a car, you don't need to worry about the price of the car. You do. Your monthly lease payment is partly based on the price of the car.

Example: A car selling for $24,000 (or having a capitalized cost of $24,000) will have a residual value of $12,000 in three years. You'll need monthly payments of about $333 to cover the depreciation ($12,000 divided by 36 months). But if the starting price was $22,000 -- and the residual value remains $12,000 -- the monthly payments drop to about $278 ($10,000 divided by 36 months). Each month, you hang onto an extra $56.

Be especially wary that the starting price (capitalized cost) is not more than the MSRP.

7. The fee flim-flam

Before you sign on the dotted line, you'll want to know the amount of fees, in addition to your monthly payments. These can include acquisition, purchase option and disposition fees.
  • Acquisition fees, sometimes referred to as document fees, are charged at the beginning of a lease. They typically run about $500.
  • A disposition fee is charged when you return the car. As its name implies, this covers the dealer's cost to dispose of the car. These fees usually are several hundred dollars.
  • A purchase-option fee is the amount it will cost to purchase the car at the end of the lease. The exact amount can vary.

While these are one-time fees, they still affect the overall cost of the lease. You'll want to negotiate everything and consider them in your computations when deciding which dealer to use.

8. Hidden-cost hoodwink

Don't automatically assume the monthly lease payment you're quoted is the amount you'll actually be paying. It may be quoted without sales tax or license. Ask what other ongoing charges will come into play, so you don't suffer sticker shock when you make your first payment.

9. Tricky-term trap

Manipulating the term of the lease is one of the easiest ways for the dealer to get you to accept their deal at an inflated price.

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