Sign and Drive Lease Deals May Not Be a Deal

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GoBankingRates Examines Leasing Practice

Leas­ing isn’t for every­one – Cars.com reports that accord­ing to CNW Mar­ket Research, nearly a fifth of dri­vers, 18.5 per­cent, choose to lease their vehi­cles instead of tak­ing out an auto loan. But with no money down required, sign and drive lease deals can seem like sim­ple and cheap way for con­sumers to get behind the wheel of their dream car.

How­ever, in its lat­est report, GoB­ank­ingRates finds that “sign and drive” deals aren’t usu­ally as con­ve­nient or cost-effective as they’re adver­tised to be.

“The first thing you’ll dis­cover is that, unless you have an impres­sive credit score, it’s going to be dif­fi­cult for you to even qual­ify for this type of deal,” says Stacey Bum­pus, expert con­trib­u­tor to GoB­ank­ingRates. The site’s inves­ti­ga­tion of sign and drive deals reveals that adver­tised offers rep­re­sent the best prices that are only extended to “well-qualified buy­ers” – a select few of applicants.

Accord­ing to the report, not all buy­ers will qual­ify for the quoted offer, and many may end up with a higher monthly lease pay­ment than they had planned.

Fur­ther­more, poten­tial leasers are often respon­si­ble for taxes, title and reg­is­tra­tion fees, upon sign­ing. “As with any other cir­cum­stance that requires you to spend your money, it’s crit­i­cal that you read the fine print on a sign and drive lease,” says Ms. Bum­pus.

As with any other cir­cum­stance that requires you to spend your money, it’s crit­i­cal that you read the fine print on a sign and drive lease. The first thing you’ll dis­cover is that, unless you have an impres­sive credit score, it’s going to be dif­fi­cult for you to even qual­ify for this type of deal.

Don’t believe it? The next time you find a deal, look for the aster­isk then scroll down to the fine print. Most likely, it will read some­thing to the effect of “For well-qualified buy­ers when financed through XYZ Finan­cial. Not all buy­ers will qualify.”

This is due to the fact that auto deal­ers aren’t will­ing to bet on a per­son with poor credit mak­ing car pay­ments with­out a secu­rity deposit or down payment.

Also, it’s impor­tant to note that most sign and drive deals require taxes, as well as title and reg­is­tra­tion fees — usu­ally at the time of sign­ing. In other words, you’re prob­a­bly not dri­ving away from a deal­er­ship with­out pay­ing a dime.

Another thing to note is that sign and drive lease deals make up the dif­fer­ence you’re not pay­ing up front in your monthly pay­ment. For instance, a no-money-down con­tract could result in $280 in monthly pay­ments, but if you were to pay $2,600 at lease sign­ing, your monthly pay­ment could be reduced to $199 per month

For more infor­ma­tion read the full inves­ti­ga­tion reported on by Stacey Bum­pus for GoBankingRates.com.

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