I’m considering leasing an 2019 Audi A5 Sportback. I’m in NJ and getting conflicting advice about the best way to structure the deal.
NJ requires tax on the lease term be paid upfront, but apparently the tax amount can be rolled into the monthly payment.
Am I better off paying the taxes up front (along with the acquisition fee/doc fee and state registration/title), or rolling them into the monthly payment? Does doing so count as a down payment, or just drive off fees?
Here’s the deal
Pretty simple… you would pay the MF if rolled in to the payment. Audi MF is pretty high relatively speaking but still most people would rolled it in to avoid it all being lost if the car is totaled.
Also, if you are open to paying taxes upfront, review the impact of using MSDs with that money instead, as It may be a better use.
So you’d generally suggest $0 DAS and roll taxes, fees and registration into the lease?
With NJ tax due in total upfront on the value of the lease how does that work if the taxes are rolled into the payment?
Not necessarily… personally I don’t mind paying $1000-$1,500 DAS for fees and first month but would avoid $4k.
Although it’s not exact, you can just use the “levied on the monthly payment” option in the calculator and use a negative down payment to get the exact DAS amount you want.
FYI - NJ is 6.625 not 6.6625 - probably just a typo in your calculator. If over $50K (sale price) there is an additional .4% luxury tax
I’d roll tax (and everything else) into the monthly payment to eliminate risk of losing that money should the car be totalled or stolen. The interest cost on carrying a few thousand $ over 24 or more payments shouldn’t be much.
It was a typo. Thanks for catching that. I’ll play around with the calculator more.
Well, the MF isn’t great. The dealer isn’t marking it up. It’s 0.00184.
I’l have to look at the MSD too.
Oh, and I’d never do $4k DAS. $1000-$1500 doesn’t seem so bad.
Actually, NJ is just the opposite of NY, and the Division of Taxation WILL refund the tax paid upfront if the lease is terminated prior to the end of the term:
"22. If the lease agreement is cancelled before the expiration of the term, is the lessee
entitled to a refund of any portion of the Sales Tax paid?
Yes. For a long-term lease, for which the dealership collected and remitted Sales Tax at
the inception of the lease (based on the entire lease amount), the lessee may seek a refund
for the Sales Tax paid for the remaining portion of the lease. The lessee may seek a refund
from the dealership or from the Division of Taxation.
The lessee may request a refund from the Division of Taxation by filing a Claim for Refund
(Form A-3730). The claim and all supporting documentation must be filed within four
years of payment of the tax."
Good point… I always think of that in terms of lease transfer and registering it out of state and forgot about it in this scenario.
The language is vague, but you sure you cannot make the same request if you finance the tax? Technically the dealer “collected and remitted” the entire amount except via the captive, vs. the lessee. Either way NJ is getting paid in full and keeping unused tax. The captive is made whole via insurance so not like they are losing out.
I think the captive can request the tax back at that point, since it is the entity paying it in the first place. I haven’t found any guidance on that, so I can’t say to rely on it.
Well, all of this makes me feel a bit better about potentially paying the sales tax upfront. I’d rather not pay ~4% on the taxes if it’s rolled into the monthly.
And any thoughts about the deal? Audi’s don’t least well (as evidenced by the leasehackr score), but there really isn’t anything else in this segment that appeals to me. The equivalent BMW is really an SUV, and the Stinger is a lot bigger.
I wonder if there is any hope that the MF improves next month as we get closer to the arrival of the 2020 MY ‘facelift’ cars.
So if I’m reading this correctly, if I traded in a lease early then I should be entitled to a partial sales tax refund in NJ?
Correct, so long as you paid the tax up front.
In that case, in NJ for a financed car with negative equity, it is better to trade it in than sell it privately because the tax savings would offset some of the negative equity in the car?
So if I rolled it into the payment then I never overpaid? I always roll everything into the lease. If that’s the case then if you lease in NJ I’d advise to always roll the tax into the payment if you always transfer out early.
I could not find my earlier post, so I’ve attached a link to the calculator. I’m trying to get this as close to $700/month as I can. I’m okay paying taxes and fees upfront. For NJ it appears you can get portion of paid taxes back if the car were to be deemed a total loss. I’m willing to risk the ~$1100 or so for the rest of the fees.
What’s the best way to determine the right number of MSDs? I did this with 5, but wondered if there was a point where more MSDs aren’t worth it.
Also considering Audi Care which adds 1% to the residual - perhaps in lieu of a couple of MSDs.
I’m trying to keep upfront cash (MSDs, DAS) around $6-$7k
Thanks
Hey there - Do you know how NJ handles a lease transfer to out-of-state that originated in NJ? Can you still request a refund for the unused portion of tax? If so, who applies for it? The original or new lessee?
Yes, apparently you can (I thought this was the case, but I had to research it). The original lessee must apply.
See here, #22: https://www.nj.gov/treasury/taxation/documents/pdf/guides/New-Jersey-Consumer-Automotive-Tax-Guide.pdf