Doing a 1-pay out of state lease on an Ioniq 5 SEL RWD.
I’m in Florida.
Dealer says the money factor is .00325.
49850 MSRP
5k dealer discount
10.5k in rebates (7.5k lease cash, 2.5k loyalty, 500 first responder).
599 doc fee
650 acquisition
+2624.25 in estimated taxes (The dealer said that Hyundai will refund any taxes that exceed what is actually due.)
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The lease contract is a hard to understand and it’s my first lease.
Here is what I need to accurately evaluate all the numbers in your lease.
Sales tax rate.
Sales tax of 2,624.25 seems way too high! For example, if I assume that your sales tax rate is
9.125%, then your sales tax is based on 2,624.25 / .09125 = 28,758.90… YIKES! Even if the
taxable base = 599 + 650 + 2,624.25 + 7,199.76 + 10,500 = 21,573.01 … that’s well short of
28,758.90.
Moreover, 21,573.01 INCLUDES TAX of 2,624.25 and so does 7,199.96… so you have tax on tax.
As such, the taxable base would be considerably less that 21,573.01 which means sales tax would
be much less than 2,624.25 under the stated assumption. Sadly, I doubt the dealer would know how
it was calculated. Hope I’m wrong. It needs to be scrutinized very carefully.
Post an itemization of your gross capitalized cost because $10 is missing. Not a big deal.
I assume that the 299.99 is license/registration. Is that correct? If so, that should have been reported
in Section 6(A) Line 6.
The accounting in Section 6 (A) & (B) is pure garbage and total non-sense. IF we were to assume, for the moment, that Section 7 calcs are accurate, then you would owe 7,199.76 + 299.99 = 7,499.75. However, the sales tax calculation remains a HUGE concern.
EDIT: I can confirm that the money factor used to do the one pay calculation is 0.00325.
I’m in Florida in a county where the rate is 7.5% of the lease installments.
The dealer is in a state where they have some sort of use tax, but he said they would cut me a check for any excess amount beyond what Florida charges as soon as they send the lease to HMF. They will cut one check to me for the excess and one to the local tax collector so that I can register the car. I’m hoping they also reduce the rent charge since the adjusted capitalized cost will be reduced by like $2k but I have no idea if that’s how it works or not.
That’s because of a $10 lien fee.
That is not correct. $299.99 is 1/24 of the overall one-pay lease amount. The lease agreement does not include title/registration (somehow).
Worst case scenario- assuming Florida allows tax on tax, I calculate a single pay of 5,667.23 (there is a potential problem with negative depreciation- see below). At 7.5%, your single pay tax is 425.04. Your cap reduction tax is 787.50 for a total Florida tax of 1,212.54. I don’t know if you’re legally liable for any tax in the other state, so I would estimate that the dealer will cut you a check for 2,624.25 - 1,212.54 = 1,411.71. See caveat below.
This triggers a CAVEAT to what I stated above. The problem is with the depreciation charge. If the adj cap were reduced by 1,411.71 (the amount of the cut check), the adj. cap would be less than the residual value triggering negative depreciation. I don’t know if HRM allows this… If HRM does not permit this, then the dealer may have inflated the tax so HRM would approve the deal. After the lease is funded, the dealer makes restitution by cutting you a check for the difference in taxes.
It’s a crazy situation. To avoid this problem, I would have paid those fees (taxes, doc fee, acq fee, etc.) upfront and used a portion of the 10,500-cap reduction to cover all these upfront fees. The balance remaining would be used as a cap reduction. In fact, taxes paid upfront would NOT be subject to tax like they could be if they’re capped in the lease. So, you avoid tax on tax and avoid negative depreciation. Problem solved. I don’t know what the dealer was thinking.
This should be itemized in the itemization section of your gross cap cost.
So, they’re going to charge you the 7,199.76 single pay PLUS 1/24 of that amount. That makes no sense.
Ah, I didn’t realize that the cap cost reduction was taxable, but I think you’re right and it is.
Honestly, I think the finance manager is also a bit confused on the numbers. I signed the lease as the 1-pay amount and total of payments make sense ($18,099.76 - $400 disposition - $10,500 cap cost reduction = $7,199.76 1-pay amount), but it took them the better part of a week to put together the agreement and they spent several hours today matching up the numbers between their system and what HMF would approve.
I asked how much I needed to wire them and they said $7,199.76 plus TTL, yet the taxes are already capitalized into the lease.
. Go for it.