Single Pay Lease
07-08-13, 03:13 PM
#2
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Do your homework:
9. Single-Payment Rip-off
Some people just can't stand to make monthly payments, but like the concept of leasing. For these folks, the car companies invented the "single-payment lease" where the entire lease is paid for in one lump sum at the time of signing. Single payment leases are OK for those with an abundance of cash as long as the dealer calculates the single payment correctly. In this scam, the dealer cheats the customer by charging him interest on the single payment for the entire lease period.
How it Works: A single-payment lease is like any other lease except the cap reduction payment is large enough to drive the monthly payment to zero. In theory, single payment leases will save you finance charges because you are paying all of the depreciation and interest up front. Because single payment leases represent less risk for the leasing company (they get all the money up-front) you should expect a slightly lower lease rate.
In this scam, a dishonest dealer cheats you out of these savings by calculating the single payment incorrectly. Basically he calculates a monthly payment based on zero cash down then multiplies it by the number of months in the lease. He then collects this amount as the "single-payment". This method in effect charges interest on the full amount of the lease including the single payment. On an expensive car, the overcharge can be thousands of dollars.
9. Single-Payment Rip-off
Some people just can't stand to make monthly payments, but like the concept of leasing. For these folks, the car companies invented the "single-payment lease" where the entire lease is paid for in one lump sum at the time of signing. Single payment leases are OK for those with an abundance of cash as long as the dealer calculates the single payment correctly. In this scam, the dealer cheats the customer by charging him interest on the single payment for the entire lease period.
How it Works: A single-payment lease is like any other lease except the cap reduction payment is large enough to drive the monthly payment to zero. In theory, single payment leases will save you finance charges because you are paying all of the depreciation and interest up front. Because single payment leases represent less risk for the leasing company (they get all the money up-front) you should expect a slightly lower lease rate.
In this scam, a dishonest dealer cheats you out of these savings by calculating the single payment incorrectly. Basically he calculates a monthly payment based on zero cash down then multiplies it by the number of months in the lease. He then collects this amount as the "single-payment". This method in effect charges interest on the full amount of the lease including the single payment. On an expensive car, the overcharge can be thousands of dollars.
07-09-13, 06:11 AM
#3
As mentioned the savings in a single pay lease is with the finance charges. I did a single pay lease in 1994 when the prime rate was around 8% (it is 3.25% now) on a vehicle that I wanted to try but not commit to long term. Given the relative low interest rates today I don't see much benefit.in a single pay lease.
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