Selling my Hyundai Lease to Algo. Do I actually need to pay the full CA sale tax in my buyout quote?

Ask the Hackrs
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1

Hi LHer,

I understand this is an old CA lease buyout topic, being discussed many times, but forgive me here asking it again.

I plan to get out of my lease early (yes, it is over 10 days) by selling it to Algo. The buyout quote provided by Hyundai Motor Finance included (RV + unpaid depreciation) * (1+tax rate%).

Algo has no issue to buy the lease from them using this quote. However, I am curious if the sales tax must be paid here, when the lease is sold from one dealer (HMF) to the other dealer (Algo). If it needs to be paid, this should go through like this. But if tax is not needed here, what should I do to get it back?

I appreciate any information or sharing similar past experience.

2

No tax dealer to dealer

3

The tax hyundai shows is not sales tax, its hyundai tax.
When you go to the DMV , the reports are that they will charge it AGAIN.

Is Algo buying direct are you doing the two step of buyout then sale to Algo?

4

explain what happened if he did the two step buyout please

5

I am more confused now. Hyundai charges tax for their own?

Algo or the other dealerships will buy it out directly. The title won’t be transferred under my name before transferring to the dealer.

I got a reply from HMF that only Hyundai dealers have the option to purchase the lease without sales tax. Any other 3rd party dealerships will have to pay the amount (with tax) which is equal to what I pay if I will buy the car out.

I ended up with choosing GoWise who owns multiple brands, including Hyundai. The dealer who actually picked up (bought) the vehicle is a Nissan dealer because it is close and also owned by GoWise. They confirmed the payoff amount with their brother Hyundai dealership, and the amount did not include sale tax.

My question becomes, will HMF be able to release the title without the sales tax? Or it is not my concern anymore once I signed the sale contract and deposit the check for the difference?

I am extremely confused by multiple sources of information.

6

Dealers dont pay sales tax when they buy out a vehicle. The hfs rep gave you bad info.

You should be good.

7

ALGO is a used car dealership, and most Used Car Dealerships do not like buying Hyundai Direct so require the two step.

The ‘two step’ is
Step 1

  • Pay Hyundai their Buyout
  • Hyundai includes something called ‘Sales Tax’
  • Go to CA DMV
  • Pay the CA Sales Tax again
  • Get the Title

Step 2

  • Sell to Algo for their price they offered
  • If done in 10 days from Title, apply and get refund of DMV Sales Tax.

Vs
Step 1

  • Go to Hyundai Dealership
  • Sell to them for the Agreed Price
  • Get a Check for the difference of Hyundai Buyout (Minus their ‘Sales Tax’) and the price offered.

There have been reports that Hyundai and Kia have been charging ‘Sales Tax’ and not forwarding it to CA DMV causing a 2nd sales tax to be paid.

8

@Ursus how much tax was included by hfs on the hyundai lease that carmax bought out recently?

9

Can confirm from personal experience, hmf said they won’t remove the sales tax for third party dealer payoff. I am guessing this is a recent change. I have spoken to multiple people at hmf and they all state the same thing. I am guessing they will give you the “sales tax” back once the account is closed? They legally can’t keep it if they are calling it sales tax.

10

No tax, just dealer payoff.
@bilalfaruqi - from what I understood, it depends on who you get at HFS. They say different things.

11

It’s most likely a recent change, when did you sell yours? I did try contacting multiple agents and they were all on the same page

12

In March, I think. But we had to fight for it. Carmax manager wasn’t helpful, first person at HFS gave them lessee payoff with tax and they stuck to it. Took a few calls to HFS to confirm that 3rd party payoff does not include tax, then went back to the same Carmax, got a normal person there and a normal person at HFS, who provided 3rd party payoff amount to Carmax.
But who knows, maybe now HFS rolled everything back to what it was last year lol

1 Like
13

Maybe :thinking:
HMF is a mess, I refuse to believe they even train their employees

14

A friend of mine sold her Hyundai lease to CarMax recently and they insisted on including taxes but I was fine with it as sales tax is clearly mentioned on the payoff quote. I know I can get them to refund the money after the account is closed, I am pretty sure they don’t wanna get audited

15

If you can please post when it happens, so far the only person who confirmed they got the fake sales tax back had to sue them.

16

I’m thinking that Carmax may be using lessee payoff and then requests (or receives) the “overpayment” for the sales tax from HFS, thus pocketing extra money.

17

Your relative didn’t happen to generate a payoff letter and compare to the check they got from Carmax did they?

18

Not sure what you mean. Their payoff was ~$1,500 more than what Carmax paid and their check reflected that difference.

19

I mean which line

image
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The total purchase price or the Adjusted Unpaid lease Balance. (Ie, no ‘sales tax’)
My pic happens to show that sales tax that CA DMV has been saying has not been paid.

20

No idea, I don’t think they had this. Just $X for their payoff and $Y for the 3rd party payoff, with $1,500 difference between them.