Using the calculator I am noticing a difference in total lease cost when I adjust the selling price down vs. down payment up. Please explain what is happening with the numbers.
Second can I use my trade equity to subtract from the selling price instead of showing it as a down payment? When I have financed vehicles in the past the trade equity has always come off the selling price. Does/can a lease be done the same way? Does this reduce finance charges as compared to a down payment?
Third, I read that a down payment is not a wise decision. The main argument I hear is if the car is totaled I may come up short for what I have put down. Don’t really understand. If I have gap insurance I won’t owe any additional, correct. Is it simply the loss of of those (payments/deposit) that I will not be compensated for? Short of down payments and Ram doesn’t take security deposits, what is the best way to reduce the monthly payment. That’s actually my goal for all the above ↑.
Lastly, I’m in Maryland, will I pay ALL taxes upfront or can they be paid monthly? Does leasing at a Pa dealer make any difference?
You pay taxes on the down payment amount. Also, lowering the sales prices means the vehicle costs less. Making a down payment doesn’t change how much the vehicle costs.
Leases generally do not qualify for tax savings. So on a finance/cash deal, most states will tax you in the selling price minus the trade in value. Most leases will tax you on the monthly payment and down payment. It will reduce the amount of interest, but not by much.
So lets use some made up numbers. Lets says you residual value is $30,000 and you have $10,000 in payments. So your total is $40,000. Now you put $5000 down and your residual is still $30,000 but you are only making $5000 work of payments, so your total is $35,000. You drive off the lot and total it. The insurance with GAP will pay what you owe on the loan. So it is $40,000 vs. $35,000 if you are comparing $0 down vs $5k down.
You pay tax on where you register the vehicle, now where you buy it. Otherwise 0% sales tax states would be the hub for car deals.
You don’t pay finance charges on money paid up front.
You may be able to get a dealer to show that they’re paying you less for your vehicle and then lower the selling price rather than show that they’re paying more for the vehicle and you paying a higher selling price. This would offset a small amount of taxes.
