Bait-and-switch on new car lease

Question

My mother is retired, and is currently considering leasing a new car to replace her current aging vehicle. A dealership near us has been offering a special on a lease for a particular vehicle for $99 a month for 36 months, plus $2000 cash or trade-in value. $99 a month was significantly less than the usual monthly payment on this vehicle at other dealerships seems to be, by nearly $100, while the other lease terms seem to be similar. It seems hard to believe that the dealership could make a profit with these terms.

Of course, such low monthly payments are often only offered "to qualified leasses." Is it possible for a dealership to advertise such a low monthly payment as a "loss-leader", and then actually offer the advertised terms to few buyers (or none at all)? If a lease is provided through the manufacturer's financial services department, does that guarantee that a potential leasse will get that advertised rate if they meet the stated credit requirements, or can the dealer essentially turn the person down arbitrarily?

Answer 1

Within some limitations, the dealer is allowed to approve or deny lending to anyone that it chooses.

Those constraints are the basics that you'd expect for any regulation in the US:

• Race

• Religion

• Nationality

• Sex

• Marital Status

• Age

• Source of income

You can read more about them in this leaflet from the FDIC's Fair Lending Laws office. (Link is a pdf download.)

As far as what to do in your mother's case, it sounds like it may be some slightly shady sales tactics, but it isn't entirely illegal... It's just annoying.

One thing you could do to try to head off some of the crazy bait-and-switch sales tactics is to communicate with a handful of dealerships in your area about the specifics of your mother's profile as a purchaser. It's much harder to give someone the run-around if you have already agreed to something in principle by email.

Answer 2

I strongly discourage leasing (or loans, but at least you own the car at the end of it) in any situation. it's just a bad deal, but that doesn't answer your question.

Most new cars are "loss leaders" for dealerships. It's too easy to know what their costs are these days, so they make most of their money though financing. They might make a less than $500 on the sale of a new car, but if it's financed though them then they might get $2,000 - $4,000 commission/sale on the financing contract.

Yes, it is possible and entirely likely that the advertised rate will only go to the best qualified lessees (possibly with a credit score about 750 or 800 or so other high number, for example).

If the lessee meets the requirements then they won't deny you, they really want your business, but it is more likely to start the process and do all the paperwork for them to come back and say, "Well, you don't qualify for the $99/month leasing program, but we can offer you the $199/month lease." (since that's the price you're giving from other dealerships). From there you just need to negotiate again.

Note: Make sure you always do your research and negotiate the price of the car before talking about financing.