To lease or not to lease - Cleveland 19 News Cleveland, OH

To lease or not to lease

Consumer advocates suggest checking the fine print in your car lease, because some dealers may try to slip in higher taxes. (Source: WOIO) Consumer advocates suggest checking the fine print in your car lease, because some dealers may try to slip in higher taxes. (Source: WOIO)
(WOIO) - I've leased cars and I've bought cars. And I'll tell you, I'll never buy again. Even with an extended warranty, it seems as soon as it's up, the wheels start falling off the car. Plus, with a lease, you get a low monthly payment. But consumer advocates say check the fine print, because some dealers may try to slip in higher taxes.

Johan Noor Mohamed is a numbers guy. So when the accountant recently got a price quote for a new car lease, he says the numbers just didn't add up, specifically the sales tax.

"It was based on the full value of the car," says Mohamed.

Something that struck him as strange, since he was only planning to lease the car for three years.

"It didn't seem right, and it's not," he says.

When it comes to leases, dealers are supposed to base the sales tax only on the monthly payments, not on the full value of the car.          

"Dealers are very creative," according to car lawyer Lou Liberty.

He says some car dealers purposely find ways to inflate the initial quote in an effort to tack on extras later; it's called payment packing.

"That's their goal, is to get you comfortable with a higher monthly payment than is required to do the deal," he explains.

Ultimately, dealers correct the sales tax, or in some cases inflated interest, before you sign. But Liberty says they keep the higher payments by packing in profitable add-ons, implying they're free. Examples he gives are "Paint and fabric protection...a theft deterrent device...an extra alarm system."

The New Automobile Dealers Association says it "encourages consumers to approach their dealer directly with any concerns about proposed terms, including taxes."

Which is exactly what Mohamed, he says, prompting the dealer correct the sales tax -- a $2,200 difference.

When the dealership Mohamed dealt with was confronted, it said the tax misquote they gave was an honest mistake and not an attempt at price packing. 

Click here for more information on what you need to watch out for when leasing.

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