Hi guys, my lease on my car ended and I had a 6k MSD which I was told would be returned to me by check.
I bought out the car for it’s residual value but I’m now being told the MSD will be deducted from the residual value of the car, instead of a check being sent to me.
Is there any downsides to this?
3 year lease
Initial residual $25000
New proposed residual $19000
April 27, 2022, 3:37am
Does it reduce your tax basis?
I’m not entirely sure. I suppose since I bought it out ,the taxes I pay would be less since I’m buying a lower priced car??? I’ve just never heard of this.
April 27, 2022, 3:51am
MSDs depend on the OEM, it’s 50/50 on who takes off the payment and who gives you back a check.
If it can reduce taxes if they take it out early, well that’s great!
Since you are buying it out, there really is no other difference that I can think of. If you are trading it in, that’s a whole another issue.
The entire purchase price would be subject to sales tax in California. If they somehow do not charge you tax on the $6k in MSD, you are coming out ahead.
April 27, 2022, 3:41pm
Where are you located.? I’m in FL and have the same question with my Mercedes. MB financial is telling me it gets deducted from the buyout. Was planning on asking the dealership how it works but haven’t got there yet. Lease is up end Dec.
Located in NJ. I guess this is the new norm.
This could be a nice small savings if they apply the tax on the new residual. Let us know what happens.
April 27, 2022, 6:14pm
For my BMWFS buyout (you didn’t mention who the lessor is), there was a page in the payoff documentation where I had to indicate my preference.
April 27, 2022, 6:18pm
Does it matter
If a new auto loan is involved, one would need to know how much to borrow.
April 27, 2022, 6:19pm
Same with Volvo. But when I did the buyout through dealer, Volvo didn’t give this option.
June 26, 2022, 6:29pm
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