VW ID4 lease followed by buyout - help me understand this deal!

Will share. In the process of buyout. Requested to remove tax from payoff, Will start the process once it is processed.

Are you in CA? My experience is that they only included the sales tax from the balance of the payments, not on the actual RV amount from VW Credit.

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No, NJ has no sales tax on EVs

Can you get them to remove that if you’re selling?

Hi all, not sure what is the latest on this lease transfer but I can tell you our experience, we leased an ID.4 last month. They do tell you that you can lease a car, make a couple payments and return it to get the $7500 off, but this is a very misleading statement.

If you return the leased vehicle to the dealer before the end of the lease, you must pay the residual value plus all monthly lease payments that were still due, including interest. This means you need to pay a few thousand dollars in interest for money that you are not borrowing any more. In our particular case at 9% interest, this would be almost $10K in interest payments.

Of course if you return a leased vehicle after a few months you’ll owe all that. They don’t just let you have a free lunch. If you buy it out after a few months you avoid all that interest.

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Who told you that?

People are talking about buying the lease out, not returning it.

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Does it make sense to do a trade-in with the goal of reducing your purchase price for the purposes of sales tax? Similar to how a trade-in works with a normal purchase

Not in California

Sorry, this would be for WA, should have specified

@SoC @carcar95 Did you actually go through with this? I’m considering doing the same, but I’d like to know if there’s any gotchas to watch out for. Thanks.

Yes, I did. Direct pay off with VW financial, no fees whatsoever, including disposition fee. Here are steps with my suggestions to speed up.

  1. Wait for the first statement to get your account number to set up online account. I called to ask for it but the rep was not able to give it to me. Guess need to be funded to get the account number
  2. Request pay off on line. Fill and sign NJ ST-4, you should have one from the dealer just replace the dealer name with VW financial. Upload that in your account
  3. Call VW financial to speak with a rep to process it. I waited for a week, no one was handling it at all until I called. The rep will inform appropriate department(tax?) to handle it
  4. A rep from that department will call u back in a few days to confirm the payoff and give your options of pay off. Go through dealer or via VW financial. See above why directly with VW if you can. Ask them to load the pay off package into your account. It should be done while you are on the call.
  5. Download the payoff package, fill info and send payment to VW. It should be cleared in a week after you send it via usps
    6 waiting for the tile and bill of sale to arrive (current status)
  6. Go to DMV for title transfer of course
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Awesome! So using the numbers in the photo in the original post as an example, which lines should be added up to produce the total amount you had to pay? Or if you’d like to break it down any other way that would be helpful too.

Thanks

Tax laws in each state may complicate your payoff, so be ware of that. In general

Payoff=residual+total remaining lease payment-unearned rental charge

Unearned rental charge or rental credit=n*monthly rental charge. n is remaining number of monthly payment. The monthly rental charge you should be able to find on your actual lease contract ( = the total rental charge/lease term) or (residue+adjusted cap cost)*MF

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My dealer is telling me I can apply the tax credit of my trade-in at buyout, but that I have to do the buyout with them and they want me to wait three months. Sounding like I’ll just trade in to the lease.

This is not true. I did the buyout with VW Credit even before my first lease invoice came in the mail. My credit union already sent VW a check for the buyout. It was a super easy process.

The dealer wants you to wait 3 months because they lose the financial bonus if you pay it off in 3 months

@carcar95 @SoC I went to the dealership today and I’d really appreciate your help verifying my numbers below before I pull the trigger. They have a Pro S with an MSRP of $50,290 and selling price of $48,581. With the $7500 rebate, the total capitalized cost is $41,081. With zero down, the lease for 10K/36mo is $680 before taxes, and the residual value is $27,157, and the money factor is 0.0031.

Now, is this formula for the total cost correct if I buy out the vehicle immediately after signing the lease? (assuming 9.5% sales tax)

((lease amount - monthly rental charge) * 36 + RV) * 109.5%

And how do I calculate the monthly rental charge? I found online that it can be calculated as (Adjusted Capitalized Cost + Residual Value) x (Money Factor), but I’m not sure what the adjusted cap cost is in my case.

Thanks in advance :pray:

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Post a link to your best attempt at the LH calculator.

Here it is, but something isn’t quite right. The lease is $680/mo before taxes, but the calculator is showing $679 incl. taxes.