Trying to find a good lease deal for an Ioniq 5 in Chicago IL.
I got this strange quote from a dealer:
I’m aware that it’s not a good offer and am definitely not planing to sign at this rate, but I’m very confused what the added $5119 “Tax on Collected Items” is supposed to be. I understand that bonuses and rebates might be taxable, but that shouldn’t be so much.
The money factor of 0.00235 looks fine, so I hope that if the downpayment can be reduced to around $5000 this would be reasonable.
You told them you’d do $11,500 DAS?
No, and I am not planning to go with this, but if they come back with a more reasonable selling price that reduces the down payment, the actual lease financing part of 0.00235 money factor for $10050 lease value looks ok to me.
I am looking for any insights into what this Tax on Collected Items is supposed to be. I know they are trying to oversell me still.
But you are right, they are totally trying to screw me by just sending the same deal, with different structured fees and reduced the monthly fee with the downpayment but landed at a very similar overall payment.
I read on the forum that Chicago adds tax on leases? That would likely explain that weird tax?
To be clear the total cost of lease is $29361.04 for 54k Ioniq 5 Limited?
I’m really just trying to understand what this “Tax on Collected Items” is supposed to be and if it is legit. The overall deal is not good
You need to plug the Numbers into the calculator so you can understand how they are getting your payment. It just looks like you are not getting much of a discount off MSRP.
Looks like your putting 3500 down plus first month. They can’t over charge you on tax, but they can get the tax wrong.
Yeah my reply to the dealer was that I am looking for a 10% or so rebate on the MSRP which they have already listed on their website.
I have a spreadsheet where I can reproduce the numbers they gave me except for the tax thing, which I really don’t understand. I asked for clarification from them on that.
First, you’re using the term “rebate” wrong. 7500 is rebate and it’s automatic. You want a dealer discount. 5k seems to be a really good discount on these. 10% is ambitious which doesn’t mean it is unobtainable. You need to learn to use the calculator. It’s important.
That would be Chicago screwing you over and why one does not lease if they live in Chicago.
The OP lease worksheet makes no sense and contains inaccuracies… 1st. The base payment of 455.17 is inaccurate. It should be 456.42. 2nd. Why is tax (40.97) levied on the base payment streams of 455.17? Illinois computes tax on the sum of the payments similar to the way NY does it. They don’t levy tax on the payment streams in the Chicago area. 3rd. The formula for sales tax in Illinois (Chicagoland) is
NOTE: The effective sales tax rate = t/(1-t). If t = 9.00%, then the effective rate is 10.4972% as shown at the bottom of the lease worksheet. Let’s consider an extreme case which inappropriately levies tax on tax (which is what actually happens in NY and Ill.)…
This is nowhere near 5119.50 shown in the OP lease worksheet. I’m convinced the OP worksheet is wrong. So, God only knows what they did to arrive at bogus numbers.
The best Défense against BS dealerships is KNOWLEDGE. Learn how to crunch all the numbers by hand or with a calculator or spreadsheet that you created. Never chase after a dealer. Instead, create a one-page lease proposal. You need to control the deal. I’ve done it for years and negotiations go so much more smoothly.
Good luck!
They also tax on the monthly in Chicago. You get one tax upfront and one tax monthly.
That’s what I assumed in my calculation (extreme case). If that’s what they’re actually doing, then something is definitely amiss. My calculation above assumes (extreme case) taxes are computed on the payment streams and then, on the sum of the payments (496.14) as well as the 11,500 DAS and 7500 rebate. You can’t compute tax on the payment streams and then, tax on the sum of those payments. It must be one way or the other. Chicago has always been corrupt. I would consider filing an unjust enrichment lawsuit. It could evolve into one helluva class action. To allow this to happen is disgraceful. This is what happens when people don’t give a damn or are ignorant.
MOTOR VEHICLE LEASES–CHICAGO LEASE TAX
The Illinois Department of Revenue has clarified the proper calculation of the “Chicago Personal Property Lease Transaction Tax” (Chicago Lease Tax). Dealers who are responsible for collecting the Chicago Lease Tax from lease customers are not required to apply the "Tax Reimbursement Calculation formula to the Chicago Lease Tax. A Chicago Dealer that leases a vehicle to a Chicago resident at a lease contract amount of $20,000 would calculate State and City of Chicago taxes as follows:
The State Tax (including Cook County Tax) is calculated by applying the Tax Reimbursement Calculation Formula as follows:
(1) 1.00
(2) 0.095 (State: 0.0725, Chicago: 0.0125, Cook County: 0.01)
(3) 0.905
(4) 1.105
(5) $20,000
(6) $22,100
(7) $2,100 State Tax
After the State tax is calculated and added to the payment, the Chicago Lease Tax of 9% is applied to the lease payment. Because the Chicago Lease Tax is a tax on the customer rather than on the dealer, no additional tax calculations are necessary. The State will not tax any reimbursement to the dealer for the Chicago Lease Tax.
Additional information about the motor vehicle lease tax changes, including a Frequently Asked Questions Section and a recording of IADA’s December 4th Lease Tax Seminar can be found at www.illinoisdealers.com. If you have any questions about the motor vehicle lease tax changes, please contact IADA at (217) 753-0220 or at ldoll@illinoisdealers.com.
https://www.votervoice.net/iframes/ILADA/newsletters/17196
Definitely looks like you get to pay tax on your tax.
Yup, I am aware of the Ill tax document which is exactly the way I calculated the tax in my post. Because I was creating an extreme case scenario, I included the 7500 rebate and an additional payment. However, according to the OP lease worksheet, the contractual amount of the lease should be is…
35 x 496.14 = 17,364.90 NOTE: The 496.14 already includes tax of 40.97
DAS = 11,500.00 (includes 1st payment which is why the above has a factor of 35 instead of 36)
Total contractual amount = 28,864.90
So that the Tax = (.095/(1-.095)) x 28,864.90 = 3030.17 according to the Ill tax doc. … still a far cry from the 5119.50 tax in the dealer lease worksheet. And, of course, you’re quite right… you do get to pay tax on tax. So, not only do we have tax (40.97) on each payment (496.14 including the 40.97) but we also have tax levied on the sum of those payment (36 x 496.14). I would still challenge the ILL tax doc in court.
This forum is pretty amazing have to say, thanks guys.
Based on the reference that you keep quoting (Illinois Automobile Dealers Association Newsletter) and the information here I came up with this breakdown of what it should be:
I’m applying the sales tax to all upfront costs (Down + EV Lease Bonus + Fees).
And then the sales tax + the Chicago lease tax on top of it to the lease contract amount over the 36 payments. That’s how I interpret all I have read.
Still doesn’t look like a great deal to me. I might go with buying an ID4 instead.
Its possible they plugged in the purchase sales tax amount into their sheet i suppose
Yeah the numbers add up if you take most of the fees plus the selling price and multiply it with a 9% tax rate. Not sure what that is supposed to be though.
Yup, tried that too. It’s really close to within $200 or so. I think Ill used to tax the sell price… not sure though.
