Whenever I have paid off an auto loan in CA, I have received a new title from CA DMV, not the original title from the bank.
Admittedly, I haven’t bought out a lease before, however, I doubt it’d be different.
mllcb42, in this case the purchaser buys the car from Subaru Financial, Subaru Financial then titles the car in the name of the Lessee holder. Lessee holder, now the title holder, then sells the car to a 3rd party.
I’m THINKING instead of sending a check to Subaru Financial, MAYBE a Subaru dealership can play go-between for a fee. Will have to wait until Monday at the earliest to find out.
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They are different situations. I’ve done both, although in NY, but I would bet it is similar in CA. In lease, title is issued in lessor’s name, which they hold. In finance, the title is issued in your name with a lien. Therefore, when you buy out a lease, the lessor simply mails you their title and a bill of sale, which you can transfer in your name or in CA, to a 3rd party. In finance, you get a loan satisfaction letter, which you can use in conjunction with a lien title, or you can send the letter and the lean title to DMV, pay fee and get a clean title.
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Ah, yes, that does make sense. In that case, you’re hoping that the bank is quick in their processing from when they record the sale/date the paperwork/report the sale to when they ship the title to you and you get it.
Either way, 10 days seems like a potential for being stuck paying taxes.
Are you intent on detailing your own thread? Stop talking about California. It couldn’t be more irrelevant to your situation
The sales tax thing is one of several potential gotchas of leasing, unfortunately. There may be a few states where you can work around it but in most states you have no choice but to pay the sales tax, and then your friend pays it when he buys it from you. I had to do this once in NY state, didn’t like it at all but luckily I had enough equity in the car that I could still come out ahead.
Some states offer no tax (or a reduced rafe) for what is called an “arms length transaction” or a “conditional sale.” I’m not familiar with MI law on this, but those terms could help you find your answer.
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max_g, only threw out California as an example where tax laws make adjustments for 3rd party purchases.
I do see where that example took on a life of its own. Wouldn’t have thought so many non-Michiganders would have participated in this discussion. Certainly is interesting to see how it’s handled in different states.
Of course I’d love to see something Michigan specific that is substantive and contrary to what I’ve already laid out, per Subaru Finance (2nd call) and Michigan Secretary of State.
Happy conclusion to the Michigan Double Tax dilemma.
Confirming, IF friend had sent payoff payment to Subaru/Chase financial 1. the car payoff included Michigan sales tax, and 2. title would ONLY be given in leasee’s name. If I purchased the car, regardless of when, a second sales tax event would have occurred. To keep the math simple, let’s assume payoff was $20,000. First round of sales tax would be $1,200 for a total of $21,200. That’s for Subaru/Chase financial lease buyout. Second purchase would be for $21,200, again $1,227 in sales tax. End of the day, final purchase is $22,427.
I contacted four local Subaru dealerships. Listed in order of distance from my location.
- Dealer #1 wanted $1,300 to handle paperwork.
- Dealer #2 wanted $250 but were closed.
- Dealer #3 No response
- Dealer #4, 31 miles away, Sellers Subaru, wanted $300 to process paperwork.
By going through the dealer, the dealer "purchased’ the car from Subaru/Chase financial and for $300 sold the car at their buyout price which does not include sales tax. As an example, dealer pays-off lease for $20,000 and then sells car to 3rd party for $20,000 + $1,200 Michigan sales tax, + $300 fee. End of the day, final purchase is $21,500. A savings of $927.
Here’s the kicker. When Seller’s bought out the lease they were given two numbers 1. Lease Buyout price ($20,000), or 2. Market Wholesale price ($19,000). They purchased the vehicle at wholesale and passed on the savings to the buyer. PLEASE NOTE: Per contract the Lessee buyout price is non-negotiable. We certainly tried to talk price down but ZERO luck.
In conclusion, example purchase using last example, Seller’s buys car from Subaru/Chase for $19,000 and then sells to 3rd party for $19,000 + $1,140 Michigan sales tax, + $300 fee. End of the day, final purchase is $20,440!!!
Scenario 1, send check to lease company - $22,427.
Scenario 2, go through dealer using lease buyout price - $ $21,500.
Scenario 3, go through dealer using lease market price - $20,440.
$1,987 saved by not mailing the check and finding the right dealer. Kudos to Sellers Subaru for making this painless.
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