In preparing his bid for the job, Bob Reep, founder and president of Reep Construction, estimated that it would four months to perform the work and that 10, 12, 14, and 8 trucks would be needed in months 1 through 4, respectively. The firm currently has 20 trucks of the type needed to perform the work on the new project.
Some of these scams are straight-out fraud while others are legal gray zones. Let's take a look at what you're most likely to encounter. Fraudulent Leasing Scams These are the types of scams that can really get dealers into trouble.
They're most often used on consumers who are ill-informed when it comes to leasing. Raising the Price of the Car Informed consumers know that the negotiated price of the car has a direct affect on the monthly lease payments.
It's called the capitalized cost in lease terms and one of the most common leasing scams involves the dealer switching the price of the car after you've already negotiated. The law requires that the capitalized cost be stated in the contractbut many consumers are still confused and don't realize what it means.
A dealer can easily add a couple of thousand dollars to the price and you wouldn't even realize it. If you do notice it and bring it to their attention, they will just claim that it was an honest mistake.
Some car shoppers don't even realize you can negotiate the purchase price during a lease, so they leave it up to the dealer and end up paying MSRP. Always check to make sure the capitalized cost is the same price you negotiated for the car. Similar to the first scam, this one involves changing or removing the capitalized cost reduction in the contract.
Again, it's the confusing terms that seem to trick people.
If you have equity in a trade-in, or are putting a down payment on the lease See: Why you should never put a down paymentyou need to make sure this is included in the lease contract. Any trade-in equity or down payment is supposed to reduce the capitalized cost but a few dishonest dealers simply leave this out of the contract.
If you're just looking at the monthly payments, you may not notice the difference and the dealer just ended up pocketing several thousand dollars. Lying About the Money Factor Money factor is another thing that seems to confuse leasing customers.
Money factor is basically the interest rate shown as a fraction. To convert it into an interest rate you're familiar with, you just need to multiply by 2, - but a lot of people don't realize this so it's an easy way for dealers to take advantage of the situation. Let's say the money factor is.
An unscrupulous dealer may tell you the interest rate is 2. If you bring it to their attention, they will claim they told you 2.
This is straight up fraud, but they always have an excuse. Hiding Add-Ons into the Lease Although this scam isn't as brazen as the first one, it's very similar in that they increase the overall price of the vehicle - this time by including useless add-ons such as pin striping or even extended warranties.
Buying an extended warranty on a lease is ridiculous since the manufacturer warranty usually covers everything during the short duration of the lease. The uninformed consumer doesn't notice the increased monthly payments.
Increasing Length of the Lease You may be negotiating for a 24 or 36 month lease, but if the monthly payment is too high, some dealers will lengthen the term of the lease to 39 months or longer to lower the payment.
The problem is they won't tell you. Sure, it will be written into the contract, but it's easy to overlook if you're not paying attention. Car Leasing Tricks The next set of scams are not necessarily illegal, but they are tricks that are used to make it seem like the lease is better than it really is.
Termination Penalty Fee If you're concerned about early termination fees which you should bedon't expect the dealer to tell you the whole truth. Terminating your lease early can result in thousands of dollars in early termination penalties.
But if you ask a dealer, they will only tell you about the early termination fee and not the penalties. Case Problem Truck Leasing Strategy By: Alex Somerville November 8, In this problem, Bob Reep the owner and president of Reep Construction, needs to figure out a way to accommodate a short term leasing plan for trucks within budget to complete this project.
In order to appropriately illustrate and solve Reep’s problem, I will be using the . For business owners who need certain equipment like computers, machinery, or vehicles to operate, there is a lot to consider. Beyond simply weighing the overall costs of buying or leasing a piece of equipment, you also need to consider maintenance, tax deductions, flexibility and more.
Truck Leasing Problem Essay Sample. Reep Construction recently won a contract for the excavation and site preparation of a new rest area on the Pennsylvania Turnpike. Penske Truck Leasing Co., L.P., headquartered in Reading, Pennsylvania, is a partnership of Penske Corporation, Penske Automotive Group, and Mitsui & Co., Ltd.
A leading global transportation services provider, Penske operates more than , vehicles, employs more than 29, people, and serves customers from more than 1, locations in.
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