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true and car sales are sluggish, bargain for a capitalized cost that represents a discount from
the MSRP.
3. Fill in disclosure form.
Ask the salesperson to fill in the rest of the disclosure form, front and back, and give you the
figures. Be sure that you check the box near the middle of the front page in order to get a step-
by-step calculation of the monthly payment. At this time, lessors are not required to provide
data on the money factor used to calculate the equivalent of the annual percentage rate of
interest (APR) charged on vehicle loans.
4. Review the disclosure form.
Review the disclosure form and ask for explanations of any items you do not understand. Make
sure that the trade-in allowance reduces the gross capitalized cost. In the past, a common
leasing complaint was that consumers were not given credit for the trade-in. To prevent this,
scrutinize the line on the disclosure form titled capitalized cost reduction. The total amount
should include rebates, cash down payment, and trade-in allowance. If you have paid a deposit,
make sure you get credit for it.
5. Take the lease home and study it.
Once the lease is written, instead of signing on the spot, ask for an exact photocopy to take
home and study. Given the importance of the document, the obscurity of its terms, and its
legally binding status, a quick decision is not smart. If possible, avoid giving a deposit at this
stage, since there is no deal until you sign the lease.
6. Compare the figures.
At home, compare the figures on the lease with those on your disclosure form. Look for
unexplained changes. Use your calculator to check the math. Verify the accuracy of the most
important figures: lease term, gross capitalized cost, capitalized cost reduction, residual value,
and rent charge.
End-of-Lease Costs and Other Considerations
When you buy an automobile, the hard bargaining and stressful confrontations often come at
the beginning of the deal. In contrast, leasing is quite simple at the onset but potentially
complicated at the end. When you turn the car in, problems may develop. They can be avoided
by reading the fine print, sentence by sentence, before you sign. Some of the important items
to look for are:
Gap Insurance. If the lease car is totaled or stolen, your auto insurance may cover replacement
but not the payments still required. Gap insurance covers the difference between the
replacement value of the car and what is still owed on the lease. It is expensive to purchase
separately. Ask if it is included without charge to the lessee.
Excess Wear and Tear. At the end of the lease, if the car has visible damage, the
consumer will probably be charged to repair it. To protect yourself, get a copy of the
written guidelines or checklist issued by leasing companies. Of course, the longer the
lease, the more likelihood of an excess wear charge. Some leasing companies have
made the marketing decision to downplay minor dings, scratches and upholstery stains.
If no damages are assessed, the security deposit will be mailed to you shortly after the
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