Can Dealer Terminate Lease b/c of $7500 Credit?

I leased a Chevy Equinox EV from a dealer in Maryland. Five days after I signed the paperwork the dealer contacted me to say they had made a mistake in the lease terms. They want me to sign a new lease at a much higher cost. The dealer’s explanation for why I have to return the car in their words: They applied the $7500 credit to my lease but the Federal EV tax credit doesn’t go to the consumer in a lease. It goes to GM financial and was already accounted for in the residual value of the vehicle for the lease. Since I am not the owner of the vehicle when leasing, I am not eligible for the credit.

Any thoughts?

(I’ve seen other posts here about lease termination, but they seem sufficiently different.)

There is no $7500 incentive on the equinox, so they’re correct. There was an error on the contract and it isn’t valid.

You can either sign the new contract, try to negotiate a middle ground, or return the car.

15 Likes

GM states: “New Equinox EV purchases qualify for a federal tax credit* of up to $7,500 for eligible buyers, which can be applied toward the vehicle price at the time of sale by qualified and participating dealers.”

You didnt purchase

7 Likes

“Both the 2024 Chevrolet Equinox EV and 2024 Chevrolet Blazer EV benefit from a Clean Vehicle Federal Tax Credit, reducing lease payments by $7,500 or more when leased through GM Financial.”

1 Like

Right. For whatever reason GM is applying that to make an artificially high residual, but your dealer didn’t think that through. So they took the residual value dictated by GM - and also took $7500 off the sale price because they misunderstood.

So they are right that they have the ability to take the car back. It’s up to you if you want to go hardcore and tell them to send a flatbed, or negotiate a middle ground so the don’t get a unit back with three digits already on the odometer, or just pay it.

6 Likes

The article you referenced itself notes - “However, these savings are applied through a manufacturer residual enhancement and not as an individual tax credit, so it’s crucial to understand how these incentives work and whether they suit your financial situation”

So it’s already reflected in the RV. You have your options at this point. Good luck

7 Likes

I think you captured their mistake exactly. But I spoke with a contract lawyer who said a contract is legally binding and may only be terminated for the reasons specified in the contract’s termination clause. A dealer miscalculation is not among the specified reasons.

A bank not approving the lease, however, is.

16 Likes

Keep in mind their is a clause in the contract that says something to the effect of:

“If the deal does not fund you either agree to bring back the vehicle or work with us on a new contract”.

The new contract may well be more money and you get to decide if you’d rather just return the vehicle and start over elsewhere.

Since this contract most likely has about a 0% chance of funding due to the incorrect calculations then you obviously have a decision to make.

In talking to your lawyer it may be better to provide him / her with the full contract for further review.

8 Likes

OP, why not just review the contract yourself to see what it says about the implications of the deal not funding?

4 Likes

Wasting time. This deal isn’t getting funded. Return the car and move on unless you want to pay the much higher payment.

10 Likes

I’m sympathetic to the OP, because it’s mindblowing that we can pay $6 for all the required information and a spiffy calculator for the month, while dealers who Have One Job do this regularly enough that we get at least a thread a week on this topic.

2 Likes

Spitballing here but might this deal fund if the dealer gave the OP $7,500 off on the expectation that they were being assigned the tax credit. Is that how the new 2024 EV point of sale tax credit works? If so maybe the math works to fund the deal and it’s just the dealer who is out $7,500. Or maybe I am totally off the mark. Probably the latter.

Anyhow, unless the lawyer is your spouse and isn’t making you pay, why would you want to spend thousands of dollars and a bunch of time fighting this? Doesn’t seem worth it to me.

Out of curiosity, what was the payment before and after?

An agressive deal on an equinox ev shouldnt have been able to even made it out the door with an extra $7500 due to negative depreciation.

9 Likes

For GM, the $7500 is added to the RV. Not sure if that’s what you’re referring to?

1 Like

OP don’t argue. You won’t win this battle. Your options are clearly laid out in the 2nd post.

8 Likes

If contract shows $7,500 as discount, then it will fund (without neg depreciation, as Matt said). If dealer put it under “rebates” then no.

3 Likes

@AllenDulles did you sign an IRS form for the tax rebate? If so you may have a different problem.

(Edit: referenced wrong person)

1 Like

I’m not the OP, so no, I did not sign a form.

In reference to your earlier comment I agree, though I do get frustrated with the number of people who say, “ a signed contract is a done deal “ or something to that effect. Without reading the clause in it regarding a deal not funding, etc….its literally the hill people are willing to die on.

Also curious on desking software and why the software isn’t a little more intuitive. As much as dealers pay Route One or whoever for this SAAS it does seem to be a high amount of mistakes. Interesting even more when you’re in the F&I office and you hear a dot matrix printer fire up. Similar to standing at the gate in the airport and hearing the same dot matrix in front of a $200 million Boeing 777 with passenger lists and load calculations on it.

It’s almost 2025, it would be nice if there was a more efficient way. Maybe someday I guess.

4 Likes