An on-again, off-again client came to me a few years ago, ready to replace their popular midsize import, on which a three-year lease was about to end.  This client had used a “competitor” of mine on their last trade and, while working on the new deal, I learned some pretty terrifying information about the previous deal.

Three years earlier, the client had traded in on the leased import a paid-off midsize domestic SUV, worth approximately $10,000 at the time.  Lease rates for the import are fairly common knowledge, repeatedly advertised on television, running around $275 a month, with a couple thousand dollars down.  Since their import’s lease payment was around the $275 a month figure, I wondered what had happened to their SUV trade, which should have resulted in a new import lease payment closer to zero.

It only took a few seconds to figure out: the domestic SUV’s trade $10,000 value, less the lease down payment of approximately $2,500, went into the “salesman’s” pocket, netting him a roughly $7,500 profit on one single sale.  Had that $7,500 been applied to the lease deal, the three-year lease on the import that followed would have cost a few dollars a month, if any.

Since everything seemed “normal” to my understandably inexperienced client, no eyebrows were raised and, not having a clue, they let the “salesman” make an enormous profit at their expense.

Although this is an extreme example of how people can unwittingly lose big bucks when they trade, it’s only one of countless dozens that occur daily, and it’s one of the main reasons I do what I do.

Notes to do-it-yourselfers: [1] Never shop based on payment alone: there are too many unnecessary costs that can be hidden in a monthly payment.  [2] Always keep the trade separate from the new purchase, at least until the new purchase is all but finalized: the trade can be used to manipulate sales price and payments, and not in your favor, often without your knowledge.