Looking for a Hummer EV in Illinois and when I reach out to out of state dealers I get two different opinions on taxes:
Some dealers quote ~8k in taxes, claiming that since the vehicle weighs more than 8k pounds the tax is due on the entire sales price. This seems correct based on what I have found online.
Other dealers (e.g. in MO and TX) are quoting 1300-3000 in taxes and DMV total. One Texas dealer specifically mentioned apply a tax credit against the sales tax.
Does any one have more details on this and what is correct?
Actually, this is not quite accurate. See the ILL tax guidelines Pp. 13-14
I know that TX dealerships may have tax credits available if you lease in Texas (I believe the vehicle must be garaged in TX to qualify). Not sure if ILL offers tax credits but don’t believe so
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but if the tax is wrong who gets hit? will they have to eat it or are they going to call me? either way the texas dealers number seems correct based on what @delta737h showed. The sales guy may not have understood
This is often the answer. Knowing a dealership, you absolutely don’t get a tax bill paid for free. If the numbers seem correct, then focus on the deal itself.
Yup. A first division vehicle is defined as a vehicle designed to carry at most 10 passengers.
FYI- Most, if not all, Hummer EV trimlines have a GVWR exceeding 8,000 Ibs.
Assuming that the Hummer EV is a first division vehicle, the sales tax is levied on all upfront taxable fees and well as the sum of the base payments rather than the sell price. The sell price is the Agreed Upon Value disclosed in lease contracts. However, ILL may define sell price differently (see P. 22) of the guidelines. Also, tax calculation examples are included on Pp. 23&24.
When buying out of state, most dealers will use a runner service as an intermediary to handle registration in your home state. Often the runner won’t get consulted until you are in the F&I office and signing final paperwork. My experience is that they more-so tend to overcharge, and then you get a refund a random number of months later. If they calculate significantly short, you will most likely be asked to recontract the lease. If it’s a few dollars off, they may cover it.
No. The tax factor .07/(1-.07) is only levied on taxable fees that are capitalized. For example, if you pay a 400-doc fee upfront, then the tax is 28 b/c the 400 fee is not capitalized. Tax on your 33900 single pay is just 7% x 33900 = 2373.00. Because fees are not typically capitalized in a single pay lease, the tax factor of .07 / (1-.07) is not applicable and should not be used.
In a single pay lease, the MF is or should be discounted, otherwise; there is no incentive for the customer to do a single pay lease. The discounted MF is used to calculate the discounted monthly base payment. The base pay is multiplied by the term of the lease to determine the single payment amount. Again, all fees, including taxes, should be paid upfront, otherwise; if they’re capitalized, they will incur a finance charge, and non-taxable capped fees will be taxed. So, if you cap the tax on the acquisition fee, you’ll pay tax on tax as well as tax on the finance charge. YIKES!
Your single pay lease should be structured so that all fees are paid upfront, and any rebate should be used as a cap reduction. That will save you the most money. So, the structure might look like this…
Single pay … 33900.00
*Single pay tax … 2373.00 … 7% x 33900
Gov Fees. … xxx.xx
Acq Fee … … xxx.xx
Acq Fee Tax … tt.tt
Doc Fee … xxx.xx
Doc Fee Tax… .. tt.tt
TOTAL DUE … TTTTT.TT
