Lease car in CA for child in VA or purchase in VA?

Ask the Hackrs
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I am in CA and my daughter is in VA – she is just graduating from college. I would like to get a car for her. I understand that VA is bad for leasing, so financing would also be fine. Any recommendations as to whether it is better to

  1. lease it in CA and insure it here, and ship it to VA vs
  2. purchase it in VA and register/insure it there?

She will probably be in VA for a year in her internship, and then onto a full-time job somewhere. Prefer a Subaru Crosstrek but I am open to other options like Hyundai, Mazda, Honda, Toyota, etc. Smallish hatchback is ideal.

2

You may run into insurance coverage issues leasing and registering in your name in CA and having your daughter use it out of state.

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She will have to pay VA sales and PPT tax if the car is moved there.
Also, low VA sales tax on the full selling price is not much worse on a lease than the high CA tax on monthly. But there is also PPT in VA, that has to be paid either way.

4

That is good to konw. Her address and license are CA. This is a temporary thing for the summer with a possibility of staying for a longer. She is still technically a student through August.

5

Must register in VA within 60 days, I believe.

6

So, the personal property tax will happen no matter what I guess. :slight_smile:

Good point on the sales tax. If I am understanding, full tax is part of the purchase price in VA? So on a $30k car, it is about $1245 (4.15% in VA) that gets added to the capitalized cost? And then payments are calculated based on that (assuming no cap cost reduction)? Then that is comparable to 9.5% on the payments as in CA (36 mo x $400/mo x 9.5% is about $1370).

7

Correct, but you can pay VA tax upfront, if you want to. You don’t have to capitalize it.
PPT gets prorated, so you’ll pay for the time the car is in VA.

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Does anyone know if the Virginia registration can use my CA address? Or does it have to be a VA address? I am just trying to minimize the need for change of address paperwork if she moves again in a few months.

9

Has to be garaged address. She will be living somewhere in VA. You’ll need to register with the county tax department for PPT.

10

Crosstrek is a good choice.

Not really a whole lot of pure hatchbacks in the states. If one concludes that the modern breed of compact “crossover” is just a slightly raised hatchback like the Crosstrek, then the options open up considerably. Honda HRV, Toyota Corolla Cross, Kia Seltos, etc etc.

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I was using the term loosely and probably should have said “smallish hatchback or cross-over would be ideal”. Thanks for clarifying.

12

Id buy a kia niro

13

Contact @AutoCompanion if you decide to lease/buy in VA

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If this is only temporary, insurance may allow it. Check with your insurance company.

My insurance (Farmers) allowed this with a vehicle registered to CA, and I was temporary out of state in Kansas City for a few months.

This assumes the vehicle will return back to CA after your temporary visit out of state.

15

You also need to know from your insurance agent what the difference will be on a likely vehicle between insurance in Virginia and California.

16

I bought a new Crosstrek in 2021 for my daughter on the R Coast after deciding that leasing TCO was higher than a purchase. Didn’t mind the upfront tax (especially since it wasn’t 10%). I got it below MSRP and they hold value really well. Our CA insurance would not insure it over there, so we registered it there (not VA though) and got her separate insurance in her name. We drove tons of comparable cars and this one was a strong first place all around. Love the ride and handling, it’s a perfect size, and AWD made me feel safe with her behind the wheel. The autopilot works great also, but she doesn’t use it.

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This is a great opportunity to discuss with your kid the different ways to evaluate the cost of things. One way is the above (3 year time horizon).

Another way is to look further down the line (6 year time horizon). Using some made-up numbers to illustrate:

Lease one (years 1 thru 3)
$1,245 sales tax
$800+$700+$600 annual PPT
$2,000+$1,900+$1,800 annual insurance

Lease two (years 4 thru 6)
$1,300 sales tax
$800+$700+$600 annual PPT
$2,000+$1,900+$1,800 annual insurance

Finance
Years 1-3
$1,245 sales tax
$800+$700+$600 annual PPT
$2,000+$1,900+$1,800 annual insurance

Years 4-6
$0 sales tax
$500+$400+$300 annual PPT
$1,700 + $1,600 + $1,500 annual insurance
:point_up:t4:these are the years you really start to see the savings

18

We were just talking about the merits of leasing a Nissan Rogue for 18/10 at about ~$270/mo vs. purchasing a Crosstrek for about $650/mo (4 years). Basically, because we wouldn’t keep the Rogue, it is essentially throwing away the money for the first 18 months. With a finance of a Crosstrek (which she really likes), she can drive it for 10 years. That might be the way we go.

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