Location is Northern Virginia/ DC area.
I would like to take advantage of the $6,500 lease credit that Toyota is offering on a RAV4 Prime; however, my “old” car is valued at about $39k and its paid off. My plan would be to get the RAV4 lease and the $6,500 credit, and then buyout the lease about a month later.
Current MSRP for a RAV4 Prime XSE is about $51-52k, so the lease credit would bring it down to about $45k. Should I just sell my trade-in separately (I’ve done this before), or is there something that makes sense if I just want to trade it in?
You can always trade it in and have them cut you a check for the value. It doesnt have to be applied to the lease.
You should also independently shoe a purchase of your current vehicle to make sure youre getting top dollar for it. Rarely will a dealer pay top dollar for a trade and give the best discount on a sale.
Unfortunately Vroom is kaput, but you can still try to get an offer to sell your existing vehicle on your own or to one of the companies that buys used cars. If this makes you more money than trading it into the dealership, you should just handle things on your own and pocket any extra cash proceeds.
Sell it to whoever gives you the most cash. VA doesn’t have any sales tax credit on trade in like other states, so no benefit to trading it into the dealer you’re buying from (except slight convenience or if they’re the highest offer)
Perhaps you’re already saying this, but, if this were a “straight” finance (not lease then buyout), the equity from the trade is applied to the total amt financed, not the selling price?
All we are saying is that in Virginia, any trade in equity or down payment does not reduce the sales tax. In some states, a trade in will reduce sales tax.
When I sold my BMW 328i in 2021 I got offers from Vroom and KBB, and a KBB dealer was slightly higher so I went with them. The car had about 108k miles and two different BMW dealers I worked with did not seem to really want the car, so their offers sucked compared to KBB.
If I plan to lease with Toyota and just sell my old car separately it makes the lease deal much more simple. I just have to work with whichever dealer can get me the car I want, and then get them to make a decent deal.
The Rav4 Prime XSE I want is the higher trim version of the RAV4 and there are fewer on the lot, but they are out there. They also seem to all have a very similar set of factory options and regional add-ons from Toyota, so the only big discriminator is the color and whether there are any dealer added options.
As someone already explained, Virginia gives you no sales tax credit for trade-in when you buy a new car. You always pay full tax on the new car. However, I’m not sure how this works if I lease and then do a lease buyout a month later.
Is anyone aware of any gotcha’s or weird aspects of a lease buyout in Virginia? I plan to buy a new Toyota RAV4 Prime tomorrow to get the incentives, and then buyout the lease as soon as I can afford it.
While going through the lease calculator and a sample of another person’s Toyota lease I found that tax rules vary quite a bit between states (the sample lease I found was from California).
Virginia makes you pay sales tax up front on the capitalized cost + incentives + acquisition fee, although the rate is a reasonable 4.15%. There is also no tax credit for trading your old car. I’m fine with that because now I understand it, but I don’t want to be caught by other unexpected fees when I do the buyout.
