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16. What is a "closed-end lease?" This is a lease in which buyers have two options. One, at lease end, they can turn the leased vehicle back in and lease another one or walk away free and clear, provided there are no penalty charges, such as excess mileage or excess wear and tear. Second, they can purchase the leased vehicle for the estimated residual value stated in their lease contract. You should only purchase your lease if it is the same value (or less) than the estimated residual value. You can then sell it privately for a profit and then buy or lease a new vehicle. 17. What is an "open-end lease?" In this lease, buyers have two options. First, they can turn the leased vehicle back in but must pay any difference in the actual current residual value and the estimated residual value stated in their lease contract, plus any and all penalties for excess wear and tear and excess mileage. Second, they can purchase the leased vehicle for the actual current residual value. 18. What is an "up-front deposit?" This is a deposit requested by a dealer before any negotiations can take place. This deposit can take the form of a cash payment, check, credit card, or even your driver's license. These are tricks by the dealer to turn you into a committed buyer. If a dealer asks you for an up-front deposit, simply say "No" and walk out. There are lots of dealers out there who are fair and will not ask for a deposit. 19. How do I get a smart buyer's plan? Learn what your current car is really worth at wholesale and retail. Decide whether you will trade it or sell it yourself. Shop for money before you shop for cars (get financing beforehand). Visit car stores to narrow your choices. Collect information on dealer costs. Understand the overall state of the automobile market, including current consumer and dealer incentive offers. Do some homework to choose your dealer finalists. Make timing work for you. Put all the pieces together so you can approach dealers with an aggressive offer. Play them off against each other to maximize your leverage. 20. How can I make timing work for me? Try to buy at the end of a dealer's incentive program. And in general, collect information and details early in the month - but always negotiate prices at the end of the month. |
