It’s a lease, so no federal tax credit at all.
Section 45W of the IRA allows Lexus Financial to take a $7500 federal tax credit on PHEV’s and EV’s when they purchase the vehicle to lease it as a lessor. They have then elected to provide a $7500 incentive to lessees.
Unfortunately, their leasing discussion has some inaccurate information there.
“Even though the dealership gets the tax credit for purchasing the car, the potential benefit to individual consumers here is that the dealer can, in theory, then pass down the savings by lowering the leasing cost by the credit amount.”
The dealer doesn’t purchase the vehicle, nor do they get the commercial tax credit. The lessor does. The dealer also doesn’t have a say in if the lessor passes on an equivalent incentive, although they certainly could add enough mark up to offset the incentive, effectively not passing on the incentive.
A specific situation I have seen pop up many times is someone leases a phev through USBank, who passes on their tax credit in the form of an increased RV, and then the salesman tells the customer that since they didn’t get the tax credit itemized on the lease, they can apply for the federal tax credit. The uninformed customer walks away at best being disappointed that their vehicle actually cost them $7500 more than expected or at worst, unintentionally committing tax fraud when they file for the ev credit.
When I plug thos #'s in, the lease calculator spew out $5k down, etc.
Where am I missing the correct placement of numbers with the info provided here in the online calculator?
What you have input in the calc is first month, upfront taxes, fees, and then an additional $1114 cap cost reduction all due at signing, which is why youre getting to $5500+
This is very close to what I computed when I did all the calculations manually (see below). I have little use for online calculators and prefer to use only leasing software that I developed. The LH Calc is the best online Calc that I’ve seen. Even so, using a calculator isn’t going to teach you very much. Suggest you learn how to perform the calculations manually (see below).
A few things…
Tax is levied on the sum of the base payments even though NJ provides the option of levying tax on the sell price. In your case, tax levied on the sum of the base payments is the cheaper option. I calculated total sales tax = 3045.69. The dealer’s tax = 3187.14 appears to be inaccurate.
My calculated monthly payment = 1210.80. The dealer’s payment of 1215.39 appears to be inaccurate as well.
The dealer used an MF = .00369 in the LFS contract, not .00319.
The following detail includes my calculated numbers…
Lease Inception Fees…
1st payment … 1210.80
CCR… 6289.20
TOTAL… 7500.00
Credit 7500.00
Due at Delivery… 0.00
Sales Tax…
Deduct sales tax and gov fees from the Adj cap as they are not taxable in NJ. This gives us a base Adj. Cap = 67473.30 which is used to calculate the base payment as follows…
Base Pay = .00369 x (67473.30 + 42383.00) + (67473.30 - 42383.00)/36
= 1102.32
Tot. Sales Tax = 6.625% x (36 x 1102.32 + 6289.20)
= 3045.69
Even if I had used 7500 instead of 6289.20, tax would be 3125.91… still less than what the dealer calculated. No question that the dealer’s tax calc is inaccurate.
Bottom line: Zero drive-off followed by 35 monthly payments of 1210.80 each.
How about paying 35 x 1215.39 = 42538.65 over a lease term of 36 months on a car with MSRP = 77060. That’s 55.4% of MSRP. Or, how about an MF = .00369. Not sure about the 6.4% discount off MSRP.
Those lease terms don’t matter much, unless OP somehow manages to talk themselves out of an immediate buyout b/c they think they are somehow being ripped off.
You’re right. However, if for some reason he is unable to do an immediate buyout, then $46,539 for a 12K mi, 3-year lease with MSRP = 77060 when he could have bought it for 72148 is outrageous. I hope for his sake he is sble to complete the buyout.
Agree. But that’s all still different from someone else’s comment that the OP was “royally f*cked” and should “sue.” Even if the comments were made in jest, perhaps that’s just as good as the lease gets (and, yes, then one shouldn’t lease this car to maturity).
Make sure you only pay state tax or use tax once. Looks like the tax is charged in13f, so just check and confirm when u transfer the title , you don’t need to pay it again.
Make sure no early buyout penalty by Lexus financial service in your state.
Otherwise the saving is legit. The saving is roughly 7500-aquisition fee - lease cost/36, won’t be 7500. But still a good deal.
Another consideration is DMV fees. In NJ, the vehicle must be registered to the Leasing Company, and in NJ, they require you pay a 4-year registration. So, that alone is hundreds of dollars, for you to just give to the State of NJ, to then reregister the car under your own name.
Additionally, check the tax as you’re then buying the car from the leasing company, subjecting you to tax again. Your savings seems negligble. I’d actually reconsider this deal and see what they can do to get you closer to the $ you want to pay. Suggestion would be to see what is out there at other dealers.
