Lease Buy-Out from VW Credit for Residual Value, Having trouble selling to CarMax in Los Angeles, CA

Hey guys, I’ve been doing a good amount of research on buying out my car from VW Credit upon expiration of the lease with the intention of selling within 10 days to avoid paying use tax. I am located in Los Angeles, CA.

I had sent in the paperwork for the buy-out inclusive of payment and received title to the vehicle today. The title notes VW Credit on the front with my name on the back of the title form. I took the car to Carmax today and they refused to purchase it, stating I need to register/title it under my name prior to selling it to them and that process would take 30 days with everything going on with the DMV.

A couple questions I had:

  1. Am I unable to sell this car to CarMax or even a private party immediately upon receiving Title VW Credit? Do I need to make an extra trip to the DMV to register or transfer title to my name? I am trying to harvest the positive equity in the car, by selling it within 10 days of obtaining title, but if there are major delays at the DMV, I’ll possibly have to end up paying sales tax on the residual value?

  2. Can I sell the car immediately to a private party? Does CarMax have different protocols for selling a vehicle. If I still need to register the car and then transfer it to my name and it could take 30 days, am I unable to sell this in the private market and am stuck with the car?

Thank You!

Albeit a different state (NC) and pre-Covid times, I did have to title a car in my name after a USBank lease buyout. I sent the paperwork and buyout check to USBank, they sent me the title and I believe a power of attorney letter. I had to go to the DMV and they issued me a new title with the car in my name and I had to register the vehicle at the same time. There was some sort of rush same day title change service that I was able to take advantage of. After the car was registered I went straight to CarMax and they filled out the title as the buyer etc and I was able to collect my positive equity check from them. Even with having to pay sales tax and registration I still pocketed about $1500 as my buyout was way under what a dealer buyout was. Then after I sold the car, I applied for a registration/property tax refund and got 11 months prorated amount back. I think what VW sent you basically is something that says yes you are the new buyer and you have permission to title/register the car in your name, but you need to actually do that before you sell it. Hope this helps.

Question- was carvana or carmax or vroom not able to purchase the car directly from VW or something in your case? I could see doing what you did if there were different buyout amounts for you vs a dealer as Ally and USBank have sometimes.

1 Like

Correct, the CarMax buy-out was higher than the residual value I had to pay to purchase the car. That’s very helpful to know, hopefully the delay doesn’t invalidate the 10-day rule to sell the car and not have to pay use tax.

Why didn’t you just let carmax deal with the finance company and write you a check for the difference?

VW charges third parties a much higher payoff.

Only the lessee has the option to buy the car at RV.

3 Likes

Good to know @max_g … do they also not release original lessee liability on lease transfer like Audi does?

If carmax won’t deal then try vroom, carvana, gmtv, or kbb. I recently got out of my MB lease early and got matching offers from several of them and once I had an offer I liked, three others matched or beat it. The dealer that bought the car still doesn’t have the title but my paperwork was done. I’m pretty sure you should be able to find one that will do a wholesale order for your car and date it when you do the sale, even if they have to wait to get the title to release your funds. You are only required to register the car to get the plates to drive it. If you have the title you can sell it. Maybe I’m being too logical.

Agree. You only have 10d before you’re stuck with tax on the buyout amount, so lining up other backup suitors for purchase is to your advantage. If Carmax thinks it’s worth some amount, maybe list it on Craigslist and see if you get a (quick) bite.

But am I still able to sell, even if title shows VW Credit and has my name on the back as the new registered owner?

Not sure how California titles work but it sounds like VW signed over their title to you. You would need to go the DMV to apply for a title to be issued in your name, which you can then sell.

Same with all VW Group leases like VW, Audi, Porsche and I’d guess Lambo if it’s through same finance company.

In California or Kali’fornia, you don’t buy out the lease, you are obligated to pay the sales tax on the Residual (Payoff Amount) if you buy out or finance the vehicle. A dealer passes the sales tax onto the next owner. You should have just shopped the lease around to Carmax, Shift, Vroom, Carvana. Remember to only do this on a weekday so whomever can call & get verbal confirmation of the payoff amount. If VW does charge a different Residual (Payoff Amount) that may or may not matter to you when profit is involved.

Nope, @Armen_Haroutunian is correct about 10 day CA window to turn around w/out having to pay sales tax. Post a link if you have anything legal to the contrary.

Besides, dealer NEVER passes any tax onto the next buyer since their purchase price will be different and that will determine how much they will pay in sales tax to CA.

If your name is on the back of the title, Carvana wouldn’t take it either. I heard SHIFT takes it without issue.

It’s not a lease transfer. A buyout ends the lease. There is no lease liability for anyone after the buyout

10 days, not aware of that but I wouldn’t have bought or or financed the lease with the intention of flipping the lease anyways. The next buyer whether they buy outright or finance the vehicle from a dealer is going to pay sales tax based on the new purchase price which is really (payoff amount to the previous leasee & current holder or title (if profit exists) + markup + repairs + maintenance items).

I did this exact process recently and didn’t pay tax.

I wrote down my experience here. CarMax also rejected so I sold to private party and acquired a CDTFA-111 for use tax exemption:

2 Likes

UPDATE: as @danglife had mentioned, shift did come in and take the car with no issues. I’m going through their process now and it’ll take a couple days to finalize it seems like.

I did not have a CDTFA-111 form signed, but have all documentation showing it sold and they have ACH payment. Is this an extra step I should take? I’m not sure what makes Shift ok with buying the car that Carmax wasn’t comfortable with doing to be honest. We did sign a REG 262, but that was the only form, assuming that’s what makes this process allowable and won’t need to take any extra steps with CDTFA?

This is my understanding also. Dealers can use the REG-262 to do multiple transfers.

DMV should not charge you tax if it’s a lease transfer buyout within 10 days, the CDTFA-111 just makes it explict.

Shift sounds like they know how to handle this scenario properly they probably have a titling person in house or a title company to handle it.

Shift refused to play ball with my Tiguan (before Covid)