How I Made a Big Mistake Leasing a Car

Customer Car Leasing Story

A few weeks ago, we received a series of emails from one of our many viewers who told us he wished he had found our LeaseGuide web site before he leased his car. He realized after the fact that he had made a huge mistake in deciding to lease and that he would share his story if we would publish it and possibly help others not make the same mistake.

Here’s his story.

” I recently needed to replace my old Honda and decided to buy another car. I wanted a good almost-new used model and visited a large local new-car dealer who also sold used cars.

How it started

I encountered a salesman who was loitering outside the dealer’s showroom, not knowing at the time that he was a new-car salesman, not one of their used-car sales people. After some friendly greetings, he asked me what I was looking for. I explained my situation — that I wanted to trade my old car for something newer and in better condition, for as little money as necessary.  I explained that I would need a loan and was looking for low monthly payments with little or no down payment.

The salesman then asked me to come inside and he would see what he could do to help me. Again, I didn’t know I was talking to a new-car guy, not a used-car guy. He pulled out a piece of paper and began writing some numbers. One of the numbers was an estimated price of a used car — one that would most likely be “best for me.”  The price seemed about right but he then did some calculations and the monthly payments were more than I wanted to pay. I asked if there was any way to get lower payments.

Those were the words he was waiting to hear. That’s when he pulled the magic lease rabbit out of his hat, figuratively speaking. I had fallen into his trap.

How I got trapped

He told me that most people in my situation choose to lease rather than buy with a loan — because of the significantly lower payments and low down payment requirement. And that I would get a brand new car rather than a used one. He mentioned that the lease required a 3-year contract but that I could end it at any time and simply return the car — or simply trade it for another car if I wanted. He seemed to imply that a lease is simply a long-term rental.

After a quick inspection, he agreed to give me more for my old Honda than I thought it was worth, but there was never even a hint that any other part of the deal was negotiable.

He then showed me the monthly payment numbers and the small down payment needed, and I was blown away by how much better this deal was when compared to the used car deal we had discussed a few minutes before. I was hooked.

He then introduced me to the Finance Manager, who was a slick-haired mobster-looking guy with a Brooklyn accent (I’m in Florida). He was nice enough but began trying to sell me all kinds of additional stuff like extended warranties (on a leased car, really?), paint sealant, fabric protection, window etchings, and credit insurance. I stupidly agreed to a Lojack theft recovery system at a stupid price, not thinking that it was now going to increase my monthly payments.

So the guy had me fill out some information, which he then entered into his computer with a bunch of numbers and printed off several documents and forms.  He briefly explained each document and had me initial and sign in the places he pointed to. The Lease Agreement form was so long and detailed that there was no way I was going to try to read it, much less understand it.

I had to write him a check for the down payment plus the first month’s lease payment. I got copies of the papers, a set of keys and manuals, and was shortly on my home in my new car. I congratulated myself on getting such a great deal on a brand new car.

How I knew I made a bad deal

After about a week, after the euphoria of the deal had worn off, I began to think about what had happened. I knew very little about leasing but realized that I hadn’t been told about a lot of things by the dealer folks. I decided to look over my contract.

Why were my payments higher than those quoted to me by the sales guy? Why did I have a mileage limit of only 8000 miles a year? It appeared that only a part of my down payment was actually applied to the cost of the car. Why was the cost of the car more than the MSRP sticker price? Why does the lease require expensive full-coverage insurance? Why is there nothing in the contract about trading for another car during the lease? What had I done, and can I get out if I want?

That’s when I began searching online for information and answers to my questions. I found After spending some time reading, re-reading, and understanding the information there over a period of several days, I soon realized that 1) I essentially knew nothing about leasing before, and 2) I really got screwed due to my own ignorance

Ten things I did wrong

  1. I should have educated myself with the Lease Guide and information on other web sites before ever leasing. In my defense, I never intended to lease in the first place but stupidly let a slick dealer salesman talk me into it.
  2. Although leasing might have been a good solution for my car problem, this particular lease was not — because I didn’t know what I was doing.
  3. I didn’t know that you should negotiate the price of the car when leasing. You don’t have to pay full sticker price, and shouldn’t.
  4. I didn’t know about residual values and money factor (finance rate) and didn’t ask about them. As it turns out, my money factor was pretty low because I have a good credit score.
  5. I didn’t know about the normal lease acquisition fee which is why my entire down payment was not applied to the cost of the car. I also didn’t know that sales tax would not be included in the previously discussed monthly payment.
  6. Although I could have lived with a mileage limit of 12,000 miles a year, the dealer secretly reduced it to 8000 miles a year to lower the payment, but without telling me. It was in the contract, but I didn’t read it at the time.
  7. I found out that you can’t swap for another car in the middle of a lease — as the sales guy had told me. You can end a lease early but it is very expensive.
  8. LoJack isn’t necessary on a leased car. With the included GAP insurance in my lease, it would pay off the lease if the car is stolen.
  9. There was never any mention by the dealer of wear-and-tear fees, excessive mileage fees, or lease-end disposition fees. And I didn’t know to ask.
  10. You can’t get out of a bad lease agreement, like you can’t get out of a bad purchase agreement.  Leasing is not renting.

I realize now that there’s nothing wrong with leasing and it can actually be a great way to get into a new car but only if you know how leasing works, how to know if it’s right for you, and how to evaluate your deal. Never let a dealer salesperson educate you about how to buy or lease a car, and know enough to ask the right questions. Ideally you should read your lease contract but if that is impractical, at least know the important numbers you should look at.

Thanks for listening. I hope my experience helps other people.”

Daniel H., South Florida


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