So I will be living in the city of Chicago which essentially means I get double taxed on a lease (state tax up front and then Chicago usage tax).
One dealer offered me a balloon type scenario as follows:
“A few things to keep in mind with a premier purchase:
Your payment is lower than a lease
There is no acquisition or disposition fee ($1200 total)
You pay sales tax on the full amount, but you retain the tax rights. So at the end of the lease, you can use it as a trade-in and get tax savings on your next car.
Between the lower fees, payment, and tax credit you save yourself thousands over the term of the lease.
MSRP: $55185
Selling Price: $49986.63
Doc Fees: $172.15
Sales Tax: $4782.46
State License, title, transfer: $221
Rebate: $2500
Cash Deposit: $1087
Total: $51575.24
Monthly Payment 36 months/12k miles: $665/mo”
What are the thoughts?
Chrysler did this when they went BK.
Balloon payments and you trade it in before the $$$ is due,
So is this not a good way to go?
I’d almost always advise against a balloon payment anything.
Which bank is this? Is the financial arm of the manufacturer aka captive? Or is this some third party lender?
My understanding is that it is through the manufacturer.
And the balloon is either you buy at residual or turn in the car, right? Not that you need to buy the car at the baloon price. In some states, bmw calls it owners choice for the same tax advantage reason.
Yes thats the way I understood it.
I’m looking at a similar proposition. The trade-off seems to be if there’s a chance you want to buy-out the lease then you will have paid more interest overall but if you are positive you will sell the car back then there is little downside (except maybe having to add GAP insurance)? Avoiding the Chicago use tax seems to be another major benefit. Does that sound right?
