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You are in the Prices Paid - Buying & Leasing Experiences
What is this discussion about?
Dissecting the Deal - How To Spot a Good Lease
10 Steps to Leasing a New Car
The "Residual Value" of Leasing
Calculate Your Own Lease Payment
#73 of 173 Re: NJ Leasing [delta737h]
Jul 03, 2011 (4:42 pm)
The state itself is half-assed, as you say, particularly the MVC (Which seems to make up rules as it goes along).
Unless the laws have recently changed dramatically, New Jersey has historically only charged sales tax on the principal, not the interest.
Bank fees have always been taxable, Doc fees and MV fees are not taxable; warranties, etc are.
Trade differences, irrespective of equity or not, are tax exempt.
Granted the deals that I usually work are highly subvented, rate driven programs where the total lease charges are minimal, but it's still worth bearing in mind. I do know that NJ as well as other states have different ways of computing taxes on leases, it's possible that upfront taxes may well be different than financing them, there was, I do recall, a loophole in Illinois law that allowed this at one point.
#74 of 173 Re: NJ Leasing [im_brentwood]
Jul 04, 2011 (2:49 am)
"Unless the laws have recently changed dramatically, New Jersey has historically only charged sales tax on the principal, not the interest. "
That's true but, apparently, SSUTA (2005) changed all of that. I've seen several different NJ dealer (Honda, Infiniti, GMAC (Ally), FMC) lease worksheets, over the last 22 months, compute sales taxes that comply with the SSUTA (2005) legislation in which interest is taxed. Moreover, sales tax is disclosed in the lease agreement which triggers a paper trail. If a dealership consistently over taxes or under taxes, and has the misfortune of being selected for a state audit, it could find itself in a very taxing situation (pun intended). And so, it's extraordinarily unlikely, and a real stretch, to say that these dealers are pocketing the alleged excess tax. Not only is it wrong and downright immoral, no dealer with any brains is going to risk engaging in such illegal practice. Furthermore, there is no way on earth that a fund provider like Honda or GMAC is going to permit sales tax to be computed in a way that violates state laws... ditto for the software providers. Otherwise, it would create a liability culminating in a river of lawsuit filings each hoping to be eventually certified as a class action.
There are four (4) methods used to compute sales taxÖ
(1) Tax lease payment streams as they are received. This is the easiest and by far the most commonly used method in such states as CA, FL, PA, and WA
(2) Tax selling price (IL, MD, NJ, SC, TX, VA)
(3) Tax the sum of the taxable payments (MN, NJ, NY, OH)
(4) Tax depreciation (CO)
Yup, in NJ there are two methods, both negotiable, in which leases can be taxed. One is tax levied on the selling price (i.e., agreed upon value); the other is tax on the total payments. I can't imagine why any consumer would opt to be taxed on the sell price as it's always cheaper to tax the total payments.
Depending upon how the lease is structured, the sales tax calculation can be quite complex especially in NY. To compound the problem, states have different regulations regarding the taxability of fees and rebates. Some tax acquisition fees and rebates; others donít. Those that tax depreciation often define depreciation differently with respect to one another. Some define it as the difference between the adjusted capitalized cost and the residual while others define it as the difference between the sell price and residual. Some use the mathematically correct formulas to compute taxes in those instances where taxes are capped in the lease; others donít.
In NJ and Ohio, it's illegal to levy sales tax on sales tax. So, whether you pay all the sales tax at lease inception or, finance the tax in the lease, the amount of sales tax liability is the same either way. However, in NY , it's a different story. It's amazing to me why the constitutionality of sales tax on sales tax hasn't been challenged in both federal and NY state courts.
#75 of 173 Just my $0.02
by kyfdx HOST
Jul 04, 2011 (6:22 am)
I do think NJ lease taxation has changed in the last couple of years..
As mentioned, it used to be strictly on depreciation, paid upfront... Now, it's on total payments, again paid upfront...
That's just from anecdotal evidence (you know, reading hundreds of posts, each day).
#76 of 173 question on residual
Aug 25, 2011 (4:57 pm)
is residual calculated as a percentage of MSRP or capitalized cost. Im looking at a kia sorento, and it seems they calculate the residual from the capitalized cost, not the msrp (hence raising the monthly lease payments). This seems to go against most of what i know, is this a Kia practice or is it industry standard or am i missing something?
#77 of 173 Re: question on residual [thalthewall]
by kyfdx HOST
Aug 25, 2011 (5:02 pm)
Residuals are calculated on MSRP.
Some makes (Toyota, for example) restrict the dollar amount of options that can be residualized. You can't really calculate the residual on a Toyota... you just have to get it from the dealer.
I haven't heard of Kia doing that, though..
#78 of 173 Can you help me?
Oct 02, 2011 (4:23 pm)
I admit I have probably never gotten a really good deal on a car, and have gotten REALLY ripped off more than once. I have done better on my last few purchases, since I started researching before my purchase, but unfortunately my most recent purchase a certified Yukon Denali, was a LEMON. I have literally had things falling off this SUV. It has had to have more repairs in the 6 months that I have owned it than all the cars I have ever owned put together! The warranty is only good for 6 months, and there are some major concerns about what I will do then. The dealership I purchased it from has been a nightmare...
I have about $8,000 ( I am being conservative) equity in the Yukon, and am ready to just trade it in for a lease. But to be honest I am scared to death to make another mistake. I am tired of being ripped off. I need something that seats more than 5 people ( we are a family of five) and I carpool a lot. So I am looking at an SUV or crossover of some type.
I have read through some of these posts and the math just makes my head hurt. I see these adds for low leases but they are always for a stripped down model. I tend to like the higher end trims. Also I only drive about 10,000 miles a year.
Where do I start?
#79 of 173 Re: Can you help me? [fishmomma]
Oct 04, 2011 (9:28 am)
First, in some states, trading in an owned vehicle on a lease will give you a tax credit.
Second, I wouldn't put any more than $2-3k of your truck's equity down on a lease. Most advertised lease payments require a lot down, are plus tax, MV, dealer fees and include rebates that you may not qualify for. Read the fine print.
A good rule of thumb is that every $1k out of pocket on a 3 year lease is about $30/mo in payment.
So if the ad is $5k out of pocket, and you want to throw $2k out of pocket, assume that the $299 will be more like $389.
#80 of 173 Lease amount
Oct 15, 2011 (4:27 pm)
I am getting into a lease for a 2012 Passat SE (automatic 2.5L) with an MSRP of ~25700 for 297.50/month for 36 months with 36000 miles. Any comments on this deal?
#81 of 173 quick question on lease question
Feb 28, 2012 (6:59 pm)
Hi, I need to make a deal by tomorrow and was wondering if anyone can tell me these numbers are correct. Its on a lexus CT200H but the numbers look fishy to me.
I have tried alot of lease calculators but can't get the numbers they are getting
Vechical price - $36,509.00
Discount - $3,233.03
Rebate - $750
Total saling price - $32,525.97
Sales tax - $2094.87
Tag/title - $298.75
Dealer fee - $699.99
Balance Due - $35,626.04
money factor is .00160
Residual is - 62%
I live in florida and I'm putting down $5k and they say my monthly payment will be $365/month for 36/months 10k miles lease
I can't get the same numbers as them, at first I asked why they charge me tax on the whole vechical if i'm leasing, but they say when they compute it, it's without that tax.
Can someone compute this for me and see what my monthly should be? The $5k down, part will be 1st months payment. - this is for a lexus
#82 of 173 Re: quick question on lease question [mefromfl]
Feb 29, 2012 (9:45 am)
I can make the numbers work almost to the penny if the residual is based on the selling price (not MSRP). Are they stating the 62% residual or are you backing into that? Do they give a stated $$ amount for the residual and if so, what is that amount? I'm not familiar with Florida sales tax so I'm not sure if it's charged on the full sale amount or just the payment. If it's not on the full sale amount then we're off by an even wider margin unless the $365 includes the sales tax.