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From the Dealership to Your Driveway

Don't expect the dealership to fix your problems

It's certainly no surprise to find that many car owners are not exactly tickled-pink happy with their current vehicle of choice. It's old, it needs fixing, the tires are bald, gas prices are going up and it gets lousy mileage, there's that dent in the front fender and the air conditioning doesn't blow cold air like it used to. And, worst of all, the payments are still stretching two years into the future. All you want is out.

Making Decisions

So our car owner becomes a potential new car buyer. He/she begins shopping for a new car, does some research, narrows it down to a few choices, visits the appropriate dealerships, takes test drives, picks up brochures, eyeballs the window sticker bottom lines. A decision is made and we're in the showroom, sitting across a desk from the sales person, hammering out the deal. Forget that part about what kind of car you wanted; now we're getting down to the real problems.

Got Credit?

If you're going to lease or finance the purchase, the dealership is going to have to check your credit. It's mind-boggling how many people go into a dealership and lie about their credit history—when the dealership will have to check it anyway—but there are those who still believe that a little hastily contrived mendacity will cover up some missed payments, a couple of bad credit card bills, maybe even overdue child support payments. Dealerships have seen all these and more.

Trade-In Value

But the single biggest area of problems concerns the trade-in. Again, it's mind-boggling how often a potential car buyer is pretty much clueless about the value of the trade-in, and the effect that will have on the whole deal. It's common enough for someone to overestimate the value of the trade-in. Everybody wants more money, and hope springs eternal. But the dealership will have a very firm, very accurate and very realistic idea of exactly what your old car is really worth to the dealership. It is not reasonable to expect the people at the dealership to make the monthly payroll by giving away money on trade-ins. What many customers are clueless about, however, is the lease payoff amount on the trade-in. Many people out there in car-buyer land are somehow of the idea that if the car is leased, you're just renting it, and you can sort of take it back to the dealership and walk away from it. Well, you can't. On any lease there will be a payoff, which is what you have to pay if you give up the car before the lease is up.

Lease Woes

Here's a chronology of what happens: Mr. Car Buyer wants a new car, but he can't afford the one he really wants, so to make it happen he puts it on a lease instead of a purchase, because that gives him a lower initial cost—the so-called "drive-off fees," more-or-less analogous to a down payment on a purchase—and it also gives him a lower monthly payment. He thinks it's kind of like a rental deal, where you can bring it back anytime. That's because he was excited to drive home in the new car and so he didn't pay attention when the finance person at the dealership explained the terms of the lease, and also explained that the lease included an annual limit on mileage and a payoff penalty if the vehicle is turned back in before the lease is finished.

Two years later Mr. Car Buyer is once again looking for a new car, but the vehicle he's currently driving still has two years to go on a 48-month lease and, since Mr. Car Buyer didn't pay attention to his personal driving habits, it's also considerably over the mileage limit. These things are going to cost him money.

Now, sitting at that desk across from the sales person, Mr. Car Buyer is incensed to find that he's not only going to have to pay for the new car, he's also going to have to make the payoff penalty on the car he's getting rid of, and throw in another bundle for being over the mileage limit.

Blame Game?

Now, listen; this is the important part: None of this is the dealership's fault. Mr. Car Buyer wanted that extravagant car in the first place, he chose the leather seats and alloy wheels and high-end stereo system, he opted for the lease, he opted for the lower mileage limit to keep the payment down, he drove the car too much, he didn't take care of it, and he also missed that credit card payment three months ago. These problems, about which he is so incensed at both the former dealership and the current one, are of his own doing.

The thing is, Mr. Car Buyer is probably going to repeat the cycle. He'll choose another car he really can't afford. To keep the payments down he'll lease it and he'll opt for a lower annual mileage limit than he should (kidding himself that this time he really will pay attention to how much he drives), and he'll also have to take all that payoff penalty and mileage charge from the old car and wrap it into the total cost of the new one.

Upside Down

In the car business, this is called being so far "upside-down" that he is now "buried." There are hundreds of thousands, maybe millions, in the same sinking boat. And, he'll blame the dealership. If you have created your own litany of vehicle ownership problems and financial goofs, don't expect the dealership to rescue you from your own errors.

Remedy

Suppose you're in a similar problem. How do you get out? Here's one way: Hang onto the vehicle you're currently driving and keep it until the end of the lease. Try to watch your mileage. Deal with it, okay? When you're done with it, don't repeat the same mistake. Here's another way: Bite the bullet. Pay off everything, but don't lease again. Make the next one a purchase, and accept that you're going to have to cover for past errors.

Just don't blame the dealership.