Lease Agreement Woe

iolanthe07

When you drove the car out of the showroom, you only handed over a small part of the value, right? The rest of the money was... borrowed. Some of it, you're paying back monthly, at a rate intended to keep pace with the anticipated depreciation. The rest, you can choose to pay back at the end. If the depreciation's been higher than expected, you're protected, and can just hand the car back. If the depreciation's been lower than expected, you can take advantage by buying then selling the car - or keeping it. In the mean while, you're paying interest on all the money you borrowed, even that "optional" final payment.


A succinct and accurate summary. Why don't dealerships explain it as clearly and simply as this? It would save a lot of misunderstanding and resentment.

AdrianC

iolanthe07 wrote: »

Why don't dealerships explain it as clearly and simply as this?

Because the dealer don't want you to realise that you're just paying off the depreciation, whilst paying interest on the whole lot. They want you to feel like it's a total bargain, and you're not really just peeing money down the drain on a non-stop treadmill of finance.

foxy-stoat

I remember seeing this poster which sums up well for folk who cannot get their head around the way it works. It really needs another line that shows what month the poor sap will reach VT date (based on their deposit and monthly payments....probably close to the end of agreement line).

AdrianC

It needs a line to show where the half-way point of the car is?