After the State tax is calculated and added to the payment, the Chicago Lease Tax of 9% is applied to the lease payment.
That’s a huge mess and can be somewhat confusing or hard to follow. Here is a much easier way to compute the total sales tax…
I have no idea what the clown bureaucrat meant when they wrote “added to the payment”. What does that mean? It’s obvious that whoever wrote it knows very little about leasing. Although not mentioned, this calculation assumes that the tax is capitalized (financed) in the lease. Perhaps that’s what they meant when they stated, “added to the payment”. You don’t add tax to the payment… makes no sense.
I found an old quote I received several years ago when living in the city to show what they did…nobody at dealers really know what is going on as they just punch numbers into a screen and state/city ‘certified’ software outputs the payment.
Years ago, Chicago levied tax (3756.23) on the sell price. Today, they compute tax on the sum of the lease payments plus DAS. Never ask a dealer how to calculate anything. I would be embarrassed if I worked for a dealership and didn’t know how to make the calculations. Looks like several different tax rates are used… 9.50% on the cap reduction, 9.00% Chicagoland tax levied on the payment that already includes a hefty Ill tax. Chicago is one of the most corrupt cities in the nation. I spent almost 5 years living in Evanston and got out after leaving Northwestern 47 years ago!
Yeah, the summation stinks because it includes MSD’s too! Leasing is a total non starter if living in the city. Outside of taxation we did love living in the city…I’m a big sports fan and the ease of access to lake beaches river restaurants/bars shows was awesome!
? I was specifically told back then by dealer that MSDs were considered part of DAS and therefore hit with the 9% city tax. I ended up not leasing in the city because nobody had straight answers.
The dealer could be correct. I know of no states that tax MSD’s… that doesn’t mean there aren’t any. If there are, it’s only a few and Ill may be among them.
You should look into a balloon in the future. I typically do a balloon lease on my cars if offered since you avoid the double tax and keep the tax credits if you want to use it as a future trade-in.
Don’t live there anymore and was only considering lease then due to ultra low MF. We just wrote checks living in the city instead. BMW offers Owner’s Choice in IL tho which is similar to balloon. Downside is higher interest rate and tax is paid on full value of car.
I doubt that Illinois has changed its policy regarding tax treatment of security deposits. Therefore, I believe the dealer was wrong to tax them if, indeed, that’s what they did.
I didn’t lease the car for many reasons but dealer told me that MSDs treated as ‘money down’ so would be subject to tax…I argued otherwise but made no headway and ended up just buying elsewhere for cash to avoid the 9% Chicago lease use tax.
Most dealers are clueless when it comes to anything tax related other than what their software spits out. I wouldnt pay a bit of attention to what they say.
Apparently, you were right, and the dealer was wrong. The dealer should know that MSD’s are not money down and it is inappropriate to treatment them as though they are money down. The dealer should also know that money down is not DAS. Money down is the same as cap reduction. This is a scary society. Lots of incompetent people in every profession.
I agree and especially in the City of Chicago where leasing is even more complicated by the additional taxation. Most people leasing there are payment only and haven’t a clue in regards to payment calculation…they just want $xxxx for $xxxx.
This was 8 years ago and they were obviously not used to being questioned on the nitty gritty lease calcs…I even spoke with their finance manager and all she could do was point me to a screen where numbers were input and the payment spit out with no explanation of how. She hadn’t a clue either. I couldn’t duplicate their numbers so just moved on. But like in my other post you know 99% of other peeps leasing just accepted whatever payment that 'puter spit out.
