Look, they calculated tax wrong so the deal won’t fund. They can eat it and have you redo the contract, you pay, or they take back the car.
Three options you have to choose one.
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This tax situation happened to me, recently as well with GMF.
I’m in NJ and leased in CT. They initially wrote the contract as tax on the monthly payment (like CT does) but NJ is taxed upfront on the payments.
Didn’t catch that on the contract until the finance manager called me a week later and told me they had to re-write the contract. He tried telling me that my payment might go up $10 a month , but I told him it wouldn’t be more expensive just because the tax is being collected upfront on the payments. It’s the same , just not taxed per month etc.
They overnighted me the new contract and the deal eventually got funded .
They simply got your state tax wrong. It’s not their fault , PA dealers prob don’t know too much about MD taxes. This is why some dealers refuse to do out of state deals . People will scream and say “I’m not paying that additional tax to my state” and they have to eat the loss of getting a car back and unwind a deal.
I had a Chevy dealer in central PA few months ago outright refuse to deal with me in NJ. I don’t blame them .
Either buck up the money to your state so the deal gets funded, tell the dealer to eat it , or just bring the car back .
Tuna
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I had this happen before on a jeep. I told them I am returning the car with now 250 miles on it thinking they were bluffing, and they would just end up eating it. Ends up they weren’t bluffing and took back the car.
I needed the car, and couldn’t get a better deal, so I showed up pretty embarrassed the next day and resigned the paperwork with the added tax amount.
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Lol…
To the OP, this is a tax issue between you and the state. It is unfortunate that the dealership did not know the tax structure, or disclose that you would be responsible. You would think as close as these states are, they would have some idea?
I don’t think was an intentional plan to rip you off. Just an unfortunate deal. If you don’t have any better options, may have to just buck up and pay…
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You (also a few others) mentioned “the deal won’t fund” because of the wrong numbers. But the contract has already went through GMF. I have my GMF account set up and already made the 1st monthly payment without triggering any issues. Not sure if that matters.
Again, it is not $100, it is $1700. Now I do have better options (v.s. paying the additional tax) and would not mind returning the car. Just not happy wasting so much work/time, plus losing one month payment, hard pull on credit, etc.
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What are your better options? A significantly better bolt deal? I don’t know how good or bad this deal is, so I can’t comment there, but obviously you can’t avoid tax on a car, so you’ll be paying the tax no matter what you get to replace it.
better deal with tax included.
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I see this differently. I think competence should be rewarded, and incompetence should bear it’s own cost. If finance is going to write paper for other states, they should be fully prepared to present accurate figures in the contract, or suffer the consequences. A few minutes of googling unearthed a calculator by DE itself:
that a good financier should have bookmarked to write DE contracts. I know the trend is to do absolutely the bare minimum to make money, but it is not the customer’s ‘fault’ for the error, and Chevy should be facilitating their flock to get these things right, lest we go the direct-to-consumer route, and avoid all of this middlemenery in the first place,
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I don’t get it how this mistake could happen. The contract should be generated by a software which takes all my numbers including zip code for tax calculation. Also, from initial quote to final contract, it went through approval by different ppl from sales to financial department at different levels (consultant, manager, director). If the deal falls apart and they take the car back, no one wins. Dealer lose whatever miles I have put on the car, (not sure they can still sell it as new), I lose the 2nd best offer back then, and also my 1st payment, credit score (i do care, will have mortgage application shortly). No mention all the time and effort involved. What a mistake.
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For what it’s worth:
“You are responsible to pay the lawful amount of tax you should have paid. That amount is set by law, not by the dealership; it’s not up to the dealership to determine your sales tax. Furthermore, the law recognizes that people sometimes make errors on contracts; if an error is typographic error, a mathematical error, or the like, a court would still enforce the contract and simply “reform” (correct) it to reflect what it should have been. For both reasons, you have to pay an difference between the sales tax charged you and the sales tax you should have paid.”
https://www.freeadvice.com/legal/car-dealership-in-kansas-170590/
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Also, here’s another discussion on the matter:
This is exactly what I thought, as well. I mean, cmon, leasehackr has a specific state calculator (to calculate taxes). You would think GM Financials system would have something similar to catch these things based on zip.
Also, here in the tri state area, “out of state” deals are done all the time. A lot of folks buy in neighboring states since were all geographically close so I guess no excuses.
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When I had got my camaro from MI, they stated up front many times there would be a tax situation. They didn’t want to deal with it so said they’d charge me the 6% tax their software has by default and I’d have to deal with paying the difference at NJ DMV. But GMF kicked it back saying they can’t do that and need to charge me NJ tax on the contract. Why that did not happen in the OP’s case is a mystery. But my dealership at least admitted from the getgo there would be a problem.
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Keep in mind the contract you signed has a clause that deals with errors in the contract, perhaps you should have read it first before signing. Errors are made, the dealer also did the contract in good faith, they don’t want to deal with this any more than you do. Maybe see if you can get a slightly larger discount off MSRP or have them make the first month payment. They aren’t giving you $1700 though.
As for the concern about the hard pull, why go get a car right before a mortgage if you are that concerned about a hard pull and the effect new debt will have on your score?
On the subject of if they can even sell it as a new car…have you seen the used car mkt lately? They can probably sell it to another person for perhaps more than they sold it to you.
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All of these suggestions are right. OP does owe the tax. The dealer was short-funded the tax, which is how the deal was ultimately able to fund, and the lessee’s account set up. The dealer can/will come after OP because that is not an immaterial sum and they wouldn’t likely eat it.
Typically, desking sw requires a manual tax rate entry. It’s not as sophisticated as one might think. This has actually gotten several brokers around here in trouble. You start biting off a little more than you can chew and take on customers from various states that have different tax rates, and you’re bound to get hurt. I’m actually surprised it hasn’t gotten more in trouble.
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I am fairly new to the website… so I may be missing a lot of administrative and procedural knowledge that dealership and the each of the respective financial service entities that would ultimately fund these deals own. However…
Isn’t this a bad sales practice where a dealer could have knowingly proceeded and ‘finalized’ the deal at the time of the delivery and has its sales number up for that target period? A consumer would have agreed on the deal because he/she/it is not a subject matter expert and has agreed to the deal because, without the additional tax implication, has resulted a lower effective monthly payment? Why do we engage such ‘professionals’ such as brokers, dealers especially nationally and globally recognized by the world renowned brands even if they are fundamentally associated with private companies, such as Lithia and etc.
I can see the argument that people can make mistakes but without multiple layers of approvals (possibly existing for various internal controls to fund tens of thousands of dollars). I am leaning towards to the argument that the burden should be on the dealer side and that maybe there could be a room for ‘negotiation’ that the 100% of the additional fee, tax, or cost should not be allocated to the consumer.
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Bad mistake by the dealer. The OP is well within his right to dispute it. After all, he may not have made the deal had he known it would cost him $1700 more than what was originally agreed upon. I do agree with others here that the only recourse would be to pay it or return the car, and ultimately pay the tax on the next deal. Assuming you got a great deal on this one, it probably wouldn’t be wise to return the car expecting to get a better deal tax included. If your deal is mediocre, then maybe starting from scratch is the better option. Moral of the story is that mistakes do happen, and lessees should be very mindful of every number on that contract, especially tax implications with out of state deals. I am sure this happens more often than not, but can be avoided.
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Agree! This is exactly why I want to discuss it here, besides calling for some advice on my case. If they can easily get away from this type mistakes, a “smart” sales can keep using this trick to get comsumers sign the contract and later ask for more money by saying “hey, you have to pay the tax, it is the law”.
I understand signing a contract without fully understanding it is not wise. But if let me go through the whole process at dealership again, I am afraid it won’t make a difference. You come in with a sales for a car with a known MSRP and agreed monthly payment; then you are transferred to a finance guy with all kinds numbers on a contract waiting for your signature. He did go thru them, but seriously, within that ~5 min, you can understand all of them, no mention all the professional terms? All I can make sure is my name, address, lease term, mile, monthly payment, due at sign, total amount are correct and consistent with the agreed quote.
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Honestly this is why we always tell folks to do their homework up front. You should have known going in what your taxes/fees were, and been able to spot that they were missing. My $0.02. But to your point - 99.9% of customers would be in the same position as you.
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For what it’s worth, my wife and I are CPAs. We actually read and proved out the contract in the FI department. The manager laughed and said we were the first people in 24 years to even read the contract - nonetheless check the math. My taxes were wrong, but only 9$. It was a lot more manual on their part than I would have expected. The contract printed on a dot matrix printer where you tear off the edges of the paper! Not sure when they get ink for that thing!
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