Lease calculator - negative monthly when trade-in amount is high

Ask the Hackrs
1

Working on a lease deal. I’m in new york and dealer is saying that if I trade in the vehicle rather than sell it to carvana, I would get a tax credit. I didn’t even realize this. I’m trying to learn how to use the trade-in feature. If I put in a trade-in amount I expect on the used car I’m trading in, the monthly equity goes negative. Clearly people can’t pay me monthly on a lease, so I want to get to the amount I would expect to get from the dealer as a payment up front.

Can someone tell me how to do this?

Any pointers to learn more would be appreciated to negotiate effectively when a high value trade-in is involved would be appreciated.

Here is the calculator link I’m working on:

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One-pay for the entire lease. Take any excess amount as a check.

This is just a micro answer to your question. In the grander scheme of things I would not monetize $27,000 worth of owned equity and watch that entire value vanish over the course of one lease ending with $0 equity but it’s your money.

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I understand there are some tax benefits when you trade for a purchase, but is there a benefit when you lease?

Would love to learn more about this tax credit.

4

If you have $27k of trade equity, you tell the dealer to use $3k of that to cover whatever DAS you negotiate and cut you a check for the other $24k.

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The key here is whether or not you have to roll the full $27K into the deal in order to get the full tax credit. In Maryland you do not have to do that, but not sure about NY. Sales tax is calculated on the difference between new vehicle price less trade in value in MD regardless of what is owed on the trade.

The other thing to consider is who is giving you the best price for the trade. Most dealers will low ball the trade value and try to convince you that you are getting a better deal due to the tax savings. It is a very shady practice. If the dealer matches the Carvana offer then the path is obvious.

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Thanks so much for this, this simple response helped me understand how to structure the deal.

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Thanks for your comment, you are totally right, the dealer did exactly that, said I had a tax credit and low balled the trade, unfortunately. There does appear to be a tax savings for me on the calculator when I put in a trade in value, it’s rather subjective who gets to keep it. I think I can price in a 50/50 split when I make my offer.

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Didn’t you also get an offer from Carvana? Don’t let the dealer steal your trade over the sales tax savings.

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You are aware the ‘tax credit’ isn’t all that much for most cars right?

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There’s no tax credit for NY unless it’s a purchase to purchase.

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Totally agree after hearing from you and the other replies, thanks!

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Ashleigh if I take out the 24000 trade in on my calculator, the upfront taxes does go up however from $128 to $2624 in the due at signing breakdown. Thus I was concluding that the tax benefit from the trading in is 2624-128, am I right you think?

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No, it’s a mistake in the calculator. The calculator is not particular to each state’s rules and regulations.

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Yes. From personal experience, there is no sales tax credit when you trade in and lease new car in NY. Every state takes this differently.
Separate those two transactions and sell the car to the highest bidder.

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