In Illinois, I believe that taxes are calculated off of the leased payments, not the selling price of the car, so instead, I would calculate my lease payments (interest + depr), and then add on another 8% - is that correct? I’m surprised this offer does it the “wrong way”
There should be no issue paying the Acquisition cost ($650) as a one-time fee, correct? I’d rather not pay interest on it. (I believe I’d still pay taxes because there is a tax on the money due at lease inception, of which this one-time payment would then be a part of)
Could have been a change in IL lease/tax laws, it’s not exactly a general question that any forum member (from the other 49) would know. I would think a few minutes searching the news tab of google search should yield your answer.
Correct
PS You can check other recent threads to see what kind of discount people got on that model.
Illinois changed its law a few years ago for the better so now tax is only on monthly payment and no longer on selling price of vehicle. Some dealers want to collect all up front. Chicago has an additional use tax if you live in city. Plenty of articles about it if you Google it.
I wouldn’t even bother with sales tax, IMO. Dealers must follow the law and cannot overcharge you or come up with some extra taxes. But they can play with other numbers in different ways.
Disagree. I would need to know (and personally verify) all the numbers are correct. This could easily be a setup where the customer agrees to X due upfront and Y monthly based on the inflated tax numbers, but the final paperwork has the correct tax number (i.e. a lower tax bill)…the difference is not noticed by the consumer (since X and Y remain as they were) and is pocketed by the dealer.
Of course every number should be checked and understood. What I’m saying is that sales tax is calculated by the system and not entered by the dealer. So when you check all other numbers entered by the dealer, there is no need to know the exact tax rate in your state and how exactly it’s calculated by the system. But it does not hurt to know it. @max_g Tax numbers can only be inflated by other numbers and not by playing with the tax rate, so one needs to make sure they are correct.
I wish we lived in a society where you could trust the dealers to do this properly and ethically, but I don’t trust anything financial related if I can’t verify it, especially car dealer sales and finance staff. Hell throw in service staff too!
It has nothing to do with the trust - it’s what dealer/finance company must pay to the state and they cannot manipulate it directly. The finance company will not accept a lease with the wrong tax (if it’s rolled in in the lease), same as wrong residual.
Yes I know what you are saying, but nobody knows what dealers actually do sometimes. They “magically” find extra money here and there that 5 minutes ago was the rock bottom they would go. Who is to say the dealer charges me extra tax and “fixes” it later when I leave, and eventually gets a refund from the lease company. The lease company does not care what the dealer does to me, the buyer.
All I’m saying is that the final tax amount will always be correct one, unless dealer makes a mistake. But then your lease will not be accepted by finance company or the dealer will have to return the amount they overcharge you if you paid tax upfront. They can’t keep anything they charged under “sales tax”.
And the lease company cares about sales tax if it’s rolled in the lease - in this case they send tax to the state, I think.
That is the crux of the issue. The termsheets/offers thrown around during negotiation aren’t final. To the extent any changes after you’ve agreed to a deal benefit the dealer (e.g. lower tax bill), the difference ends up in his pocket if you’re not paying attention. Look at these scenarios with just first month upfront assuming $60k MSRP, 60% RV, and .00050 MF and the same DMV, acq fee for both:
Dealer offers 10% off for 54k sales price assuming Chicago resident (9.5% sales tax + 8% use tax on top) = $677/month & the buyer agrees to these terms.
Dealer corrects the “FINAL” numbers for the buyer who is actually a non-Chicago, Cook County IL resident (8.25% sales tax). The buyer doesn’t notice any changes since it’s still $677/month. But the sales price is now $55,750 to achieve 677 and the dealer has ‘kept’ an extra $1,750 for himself.
So to be clear, if the dealer makes a fundamental error on a lease contract, as per your example, and you sign it, you are basically taking responsibility for their error with no form of recourse?
The final contract is correct, so there would be no recourse. What you agreed to beforehand in person, over the phone or over email can have mistakes in them. If you’re not paying attention, those mistakes (perhaps sometimes intentional) will be rectified before signing in the dealer’s favor.
And again - I’m talking about final numbers only. And of course one should verify all the numbers before signing anything. It helps to know tax rate, but I’m never concerned if my number for tax is a few $$ off of dealer’s - their system calculates the exact amount.
No need, but nice to know. For someone it maybe nearly impossible to calculate with different state/county rates and taxable/non-taxable incentives.
In the end - you will have the correct taxes withheld, whatever they are. And if the dealer played games with numbers and your final cost is higher - it’s not because of the wrong tax. When you finally sign - the only correct number will be sales tax on whatever BS or correct numbers.
YNWA