CLS16

I know the sales tax in new jersey is 6%, but is it 6% of the selling price of the car or is it 6% on the monthly lease payments on the car?

I'm getting a different story from dealerships outside of NJ referring to a lease in NJ.

Any help would be appreciated. Thanks!

chef chris

Tax is tax. You pay on the value of the car...you also have a "rental tax" on a lease...maybe that's what's getting mixed up.

That's usually only a few bucks extra a month though.

gto2050

They roll the 6% sales tax into the capitalized cost. No monthly tax

cl-driver

NJ sales tax is 6% whether you purchase or lease a car. Difference is you will only pay 6% sales tax on the lease payment (which is paying tax on the monthly depreciation). In NJ, it is calculated into the monthly payment so you will probably not see it when you get a quote from a salesperson. But when you sign a lease contract, it should be broken down for you. Make sure that when you get a quote, it includes the NJ sales tax. Don't let them add it on after they have given you a quote.
When you purchase or finance, you will pay 6% on the selling price.

fuzzy02CLS

iTrader: (2)

You pay tax on each monthly payment. So If it's $400/month 6% tax on that would be $24 so monthly payments would be $424.

chef chris

I've never heard of a lease without a 'lease-use tax'. 6% is in addition to any monthly charges.

It even applies to renting a movie at Blockbuster...

CLS16

THat's exactly what I thought. That's how my CL-S was done. But now I'm thinking of getting the G35c from Texas, and the dealership is telling me that NJ applies the 6% sales tax on the selling price of the vehicle, which comes out be about $2200, as opposed to $990 if it was to be calculated on the monthly depreciation value.

gto2050

Then how do you explain that when I moved here from Cali, my monthly payment went down by a significant amount? And when I leased my next car here the sales tax is put into the capitalized cost? And when a friend of mine moved to FL his payment went up because of FL sales tax?

mclarenf3387

Sales tax only applies when the title is transfered and reregistered. Your payments don't vary when you move, only insurance varies.

CLS16

Ok, I found out. On a lease the tax is not calculated on the selling price of the vehicle or on the monthly payments of the lease. The tax is calculated on the amount that results from subtracting the cap cost - residual = amount that is taxed. You can either roll that into your monthly payments, or pay it up front.
It's ridiculous, cause I called 3 different acura dealers here in NJ asking them this question, and all of them said you're taxed on the monthly payments. Shows you how much they know.

cl-driver

The cap cost (selling price of the vehicle) - residual = your monthly payment x term (ex. 36 months). For example (36 month lease), with a selling price $28,800 and a residual of 50% (which would be $14,400), your monthly payment would be $400 ($14,400 divided by 36) + any interest. Your tax would be $24 monthly (6% of $400) or $864 total (6% of $14,400).
It's easier for the salesperson to tell you it's on the monthly payment rather than explain the above.

gto2050

I give up. I guess I'm a liar.

chef chris

NO, not a liar, you just don't understand.

Then how do you explain that when I moved here from Cali, my monthly payment went down by a significant amount?
Could be any number of reasons.

And when I leased my next car here the sales tax is put into the capitalized cost?
~That's usually what happens. "Cap Cost" just means down payment...nothing more. Anytime you buy/lease a car you have the option to roll in the tax or pay it up front. They charged me tax for the amount of the car I bought(54%, etc) and the ADDITIONAL monthly 'sales/use tax' of $7.98.

And when a friend of mine moved to FL his payment went up because of FL sales tax?
~mclarenf3387 explained that one already. Anytime you transfer ownership from one state to another, you pay tax & registration all over again. I'm sure you have the option to bill it seperately or in one lump some(my AHFC gives me that option).

The salesperson can say whatever he wants, but you PAID the sales tax already...whether he says it's monthly or not. Read your contract.

But :whocares: you say tomatoe, I say tomato...either way, we both still have to pay taxes & die broke.

louisn

The most common method is to tax the monthly lease payment at the local sales tax rate. This means you only pay tax on the part of the car you lease, not the entire value of the car. For example, if your local sales tax rate is 5%, simply multiply your lease payment by 5% and add it to the payment amount to get your total payment figure.

As a side note, with this method you are paying sales tax not only on the depreciation amount of your payment, which is fair, but you're also paying tax on the finance charges, which is not so fair. In no other type of business transaction do we pay sales tax on interest or finance charges. This is an area for improved state tax legislation.

Canadians pay sales tax (PST + GST) only on monthly payments, as in most of the US.

In some states, such as Ohio, you pay sales tax up front on the capitalized lease cost. In other states, such as Texas and Illinois, you actually pay sales tax on the full value of the leased car, not just the leased value, just as if you were buying it. Not fair at all, and another opportunity for more reasonable tax laws in those states.

Before you lease, you should ask your dealer how sales taxes are applied, and by how much, in your area. Generally, you pay sales taxes for the locality in which you live, not for the locality in which the car dealer has his showroom.

chef chris

I think there are just too many differences in the way the different states tax the purchase for any of us to have a diffinitive answer on this.

Just between PA & DE there are huge differences...6% vs .275% for example. MD is a security interest state, where DE is a title state.