My head hurts from reading this thing. If the dealer is wiling to apply the rebates to the one pay why not try to make lemonade out of lemons and save 1k in taxes? Counter with a much steeper dealer discount and see if they bite.
@delta737h I come back every summer. Love the summers…winters…well, not so much…haha
It absolutely is. That’s why there is ~$1700 in taxes being paid, not ~$800.
By setting the base monthly payment without it applied and taxing that, the cost that the rebate is applied to gets taxed. So while you are correct that there isn’t a line item for ccr tax, as it isnt a cap cost reduction, you’re still paying tax on the full cost.
If the incentive was tax free, tax would only be applied to the cost that isn’t covered by the rebate.
Your wallet doesn’t care if they itemize it as a ccr tax or capture it in the monthly being used to compute the price, you’re still paying the tax.
Okay, I actually did the math to show that you are, indeed, correct. Here’s the math…
Suppose this lease were structured as a traditional monthly payment lease in which the rebate is used as CCR, the payment would be…
Base Monthly Pay = .00001 x (47894.92 + 35629.20) + (47894.92 - 35629.20) /24
= 511.91
Monthly Pay = 1.06276 x 511.91 = 544.04
The Lease Inception Fees are…
1st payment 544.04
CCR Tax 938.26
DAS 1482.30
Total Tax = 6.276% x (24 x 511.91) + 938.26 = 1709.32
Under the given single pay structure…
Total Tax = 24 x 71.23 = 1709.52
The 0.20 difference is attributed to the MF and rounding. So, essentially, they’re equal. Therefore, the 14950 rebate does get taxed in the single pay lease.
My apologies to you and everyone else that participated in this thread. It seems that I don’t see things as clearly as I once did. Glad I’m not teaching anymore… if I only would have done the math to start with… Ugh!
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