Wheeling & Dealing

Did you pay any attention to the big ad section of Bull Valley Ford in this morning's Northwest Herald? I was reminded of a seminar I put together in Denver in 1986, called "How to Deal with Car Dealers." Many people still bought cars then - I mean, "bought" them, not rented them from the dealer for three years.

Was it clear from the ad this morning that the deal is a lease? It's a Lease. Hear that? LEASE. And what is a lease? A temporary use of a car for a limited period of time, sort of like renting a house. You get to enjoy it and, at the end of the rental period, you move out.

Look at the come-on in the big print. "50% off MSRP" and "Program". Car buyers have learned what MSRP is. That's the top line on the sticker. The Asking Price. The price no one pays.

And "Program." We heard continually about "program" cars. Those are the cars driven by car company employees for a year or so and then sold as "premium" used cars.

Now, this ad did not say they were "program" cars. It just calls the deal a "program."

The third time I read the ad, I finally saw the word "Lease", where a line informs all that it is a "Ford Credit Red Carpet Lease."

How does it work? Pick out a 2008 Ford. Divide the list price by 2 (remember now - no one pays MSRP. So why would you start with MSRP on a "deal"?). Then divide that number by 39 (the number of payments in this Lease). What? No interest? Of course, there is interest; it's buried in the number that you divided by 2.

If you get out your microscope, you can read the tiny print that tells you that pricing excludes tax, title and "$150 doc fee." What's a "doc fee"? That's the documentation - the paperwork. Getting you to pay it just increased dealership profit. What do you do when you see that line? You get out your black Marker and put a big thick line right through it. Would you just open your wallet and peel off three $50 bills and lay them on the desk? Of course not. That's dealer profit. Why would you cough up money to cover his overhead for the title clerk?

Remember when you expected (on a lease) to pay for annual mileage over 15,000 miles? And maybe at $0.15/mile?

Keep reading. On this deal you hit your mileage limit at 10,500 miles/year and then you get to fork over $0.20/mile. So, if you drive 20,500 miles in the first year, you just racked up $2,000 in added cost at the end of the lease! Still looking like a good deal?

And if you want to buy the car at the end of the 39-month lease? Well, you know in advance that you'll be able to buy it for the other 50% of the MSRP. What a deal! Get out your Kelley Blue Book and figure out what cars are worth 50% after 39 months. Just go to http://www.kkb.com/

Leases must be approached very carefully. In some cases, they are good deals, usually when the vehicle will be used in business. Why do "ordinary" people go for leases? They can keep up with the Joneses and get more car than they can afford.

Do you keep a car for a long time? Do you buy a new car and drive it until the wheels fall off? Do you drive a lot of miles in a year? Then BUY the car; don't lease it. Be sure to read (and print) all the good car-buying tips on http://www.cars.com/

Years ago I came across a saying that still holds true today. "In the beginning there is price. In the end there is cost."

Be sure to figure both before you lease a car. And before you buy one.