Novice

One week after I leased a car from NJ, the dealer contacted me and asked me to pay more. They added 5% of tax on the amount of depreciation of the car as many other states do. I know that in NY, you have to pay tax on the entire amount of the car. Now, this dealer is asking me to do the same thing as in NY and sign the new contract. For those who leased a car in Maryland, could you please help?

Thank you for your help.

Z Factor

I can't speak for MD, but I would contact a local lawyer. I think they are stuck based on the signed contract, and can only hope you will agree to come in and sign a new one.

Good luck, and tell us how it turn out.

Novice

Thank you. It turns out, MD does require the tax on the purchase price.

audinomore

Novice,
See below thread. I had a similiar experience. Different reasons but the bottom line is they are trying to take more money from you.

Do you really believe that they made a mistake? They do leases every day. Make them state in writing where they made a mistake. Make the GM sign the letter. My dealership never did which just tells me that things were not on the up and up.

DO NOT SIGN ANYTHING.

http://www.acura-tl.com/forum/showth...threadid=67791

Novice

Thanks, Adinomore!

It is true that the amount of money they are asking for is the correct amount (I did the calculation again). I just feel like I am getting scammed. This is after I caught them switching the residual number before I signed the lease. I don't know what to do.....

audinomore

Listen,
If you have the car and a signed contract then you are in control here. If you read the article that I linked about "bushing" you will see that you are getting rolled here. Contact your state attorney general. I called mine yesterday even though my issue was resolved and she said that it really sounded like the dealership was not on the up and up. They are sending me a complaint form so that I can put what happened "on record."

BTW In my deal they also tried to move my residual down also... Didn't happen.

Novice

Thanks, again. Now that I see all the numbers and after calling 5 local Acura dealers in MD, it is clear that my dealer made a mistake and paying more to fix the problem is a right thing to do. I will do so after I will talk to the general manager and reexamine the contract (they will have to FedEx it to me).

It is good that you didn't have to pay more, because I have to pay about $900!

youngmic

It's hard for me to believe this. You've got the car and you've got a contract, correct? Why should you be liable for their mistake? I'm confident that your dealership makes plenty of profit on these leases.

You've stated that you "have to pay about $900". Is this a "have to" or a choice? If it's a "have to", what happens if you don't do it? It just sounds like you're giving up to quickly on this one. I don't know about you, but I could do a lot with $900!

Novice

I guess I don't have to, but I do clearly see the mistake that was made by the dealer. If this is a mistake on the wrong residual or something, I may try to fight. But, it was about the state tax. I did a lot of homework before I went there to deal, but I also have to admit that even I didn't know that one has to pay the tax on the whole purchase price. I will try to talk to the general manager, but I kinda know what he is going to say.

AC

Bottom line is you will have to pay...signed contract don't mean squat in the car industry unless you get your first payment statement from the leasing company.

The dealer in NJ may not even have gotten you financed or they have ways to stop the financing (they can be really tricky - I know because I have asked my Audi dealer to redo the financing after a week had gone by - long story).

If the dealer made an honest mistake, then you should pay what's due to them. My hats off to you for being ethical and trying to help them fix a problem they made.

I never heard of pay tax on depreciation only but I do know in VA and MD you pay tax on the sales price not on the depreciation.

Good luck!

Novice

Dear AC:

You just made my day. That's what I am going to do. Besides, $32900 for a TL/Auto/Nav was a good price not that it matters re: my current little incident.

Thank you.

youngmic

If they truly made an honest mistake, then it's the right thing to do.

But, as audinomore asks, are you sure they made a mistake? If they did, what other "mistakes" might they have made? It's shoddy work on their part to forget something like this.

I would think that to most people, a car purchase is a very big deal. Every penny counts. To "leave out" $900...well, it's either dishonest or negligent - imo of course.

Obviously, though, if after looking at the situation from all angles, you feel that the best and most honerable thing to do is to help the dealershp out, I agree with AC - my hat's off to you as well!

Hopefully, you'll establish an excellent relationship with that dealer and be able to count on them to "go the extra mile" now and again.

AC

Any and every car I've ever leased was taxed on CAP Cost, not residual or tax on term of lease.

Reading this post, I don't think that some are aware that the dealer can just call you and tell you to bring the car back cuz we didn't get you financed (you can never prove it if they never submitted your loan to the leasing company, in this case Honda Financing I assume).

Say your car was $33K and risidual is $17K, basically you're borrowing $15K over the period of lease...the $33K should be taxed at a rate of 5%, not 5% of 15K you're borrowing. This could be true in some stated but I know in VA and MD you're taxed on actual sales price.

You can try and "stick it out" and see if you come out ahead $900 but is it worth all that headache of them calling you and possibly telling you to bring the car back....read your contract carefully, I'm pretty sure somewhere it reads "assuming they get your financing approved". Dealers are not that retarded despite what some of you may think.

Put it this way, in this case they screwed up and want their money...turn the tables around, if they promised you Leather Seats and you paid for Vinyl, don't you want your money back or Leather? Why should this be any different? I guess some just always try to "get over" on some...to each his own, I have my opinions on those type of people but we won't get into that.

Good luck in whatever decision you make!

Novice

I've decided to send them a check and sign the new contract as soon as I get it.

Thanks for your comments!

Nicki

Be careful, if the dealer made a mistake and it is leased/financed then they have the right to confiscate the car from you if it is not addressed. If you went to an ATM and 500 $20 dollar bills popped out and your account only showed a debit of 20 then you really think they would let you get away with the mistake? Dealers have the upper hand here and not the consumer. The state of MD must pay tax like NYC and if the dealer made an error then you should pay up or they will have a sheriff tow your car away.

TLGator

Novice - You may be making a BIG mistake.

As audinomore points out, this sounds VERY MUCH like a variation of the bushing scam.

The leasing laws differ from state to state. Some, like Maryland (where I live) unfortunately collect sales tax on the purchase price (CAP cost) which makes leasing in this and similar states a little less advantageous. (Doesn't stop me, though. I like new cars. )

Other states collect sales tax on the depreciated portion. NY/NJ might well be among those states, I don't know.

A few states actually collect the tax with other formulas, but that's not relevant here.

What makes this sound so suspicious, though, is that the finance people at the dealerships are very well trained to get these leases right the first time. I have a very hard time believing they made a mistake before you signed the original documents. I'm also not sure I agree with the comment above that your lease can be invalidated if the financing "doesn't go through." I think that's BS - the financing "goes through" BEFORE the dealer lets you sign the lease and drive the car off the lot.

I suppose it's possible that this particular situation is legit, but I doubt it. I think Z Factor gave you the best advice: contact a lawyer.

Novice

Thanks for your advice. The numbers were turned out to be correct per the dealer's claim.

But, how do I go about talking to a lawyer? Doesn't this cost a lot of money? I have a feeling that it will cost more than $900 to talk to those money suckers not that what the dealer said is wrong.

Thanks for your advise.

TLGator

True, lawyers are not cheap, and if you don't have one already, it will generally cost more to establish a relationship than just to call one you know. Either way, they charge out the you-know-what.

But it would still take about 3 hours of a lawyer's time to spend $900. An honest lawyer (I know, oxymoron) will probably spend no more than 30 minutes on this.

Ask some of your friends or family for a referral to someone they know and like.

Or, consider taking the following advice, which admittedly comes from a stranger (me) on an internet board. I think it's pretty sound advice, however: Drive the car, wait for the finance company to send you the payment book or monthly statement, and tell the dealer you're sorry, but you don't believe you owe them any money. Be polite with them, of course, and tell them if they really feel they are in the right, they need to send you a signed letter explaining the problem and detailing the solution. Tell them you'll have a lawyer review their letter and your copy of the signed lease contract and get back to them. If this is a bushing-type scam, you'll probably never hear from them again.

audinomore

It is a free call. Definitely do some due dilligence before you decide to part with that money. Call the AG's office and ask them for their advice. Mine was very helpfull. I have an inherent disstrust of dealers now and I really think that they are lying to you. To forget something as big as the tax on a car is inexcusable.

At the very least ask for something written from the GM to explain what happened. Then you at least have a paper trail. My guess is that all of this has been done via the phone and therefore there is no evidence. If they refuse to put anything in writing then ask yourself why. It was obvious to me...

Novice

Thanks all for your advice. I will definately get a letter from the GM tomorrow. But, if it is indeed the dealer's mistake, I guess there is nothing I can do except paying the amount that I owed them anyway.

Thanks again.

Novice

One more question. Do they tax (MD 5%) on the negotiated purchase price ($33000)? If I put down $2000 down payment, do I expect 5% on $31000?

Just curious.

KilroyR1

The tax is on the full purchase price, not the net after down payment. I to live in MD, and just ordered a 6MT w/o navi for 31,000 in York, PA. I will not pay tax, you pay the excise tax at the MVA when you register the car.

Did the NJ dealer get you a Maryland tag? I don't think you should have paid tax in NJ.

Don

Novice

Hi, Don:

I didn't know you can pay the tax at MVA in MD. They gave me a temporary tag valid for 20 days and will FedEx me the real tag as soon as get it. What is the advantage of paying the tax here in MD at MVA?

rets

Excuse me. Do I miss something here?

I think your residential tax will be applied to your total purchasing price, no matter where you get your car. If you get your car in CA, and like to register your car in your home town, MD, your dealer in CA should charge your hometown tax rate instead of that dealer's local tax rate. (I remember some ppl trying to get Oregon plate instead of California's... cause lots of troubles...)

If your dealer would be able to apply for your plate for you, you don't need to go to your loca DMV or MVA to proceed your registration again. Otherwise, you should regsiter by your own if your dealer only issue you the TEMP plate without registering for you.

AC

Despite what some say, you sign the contract in most cases before financing even gets approved. The Finance manager makes a judgement call based on your credit history and decides if he/she feels the financing will go through.

If the dealer in NJ charged you tax then yes they are responsible for getting you MD tags as they collected MD tax and must pay the State of MD that tax amount.

If the dealer charged you tax based on the amount financed, say $15K for example, they made an honest mistake.

Getting an attorney is certainly your option and choice but IMO you will achieve nothing. Please read you contract VERY carefully, I'm pretty sure somewhere in there it states that you may have to bring the car back if financing is not approved, or they may have gotten you to sign someting stating that (I recall a buddy of mine got hammered because he could not get financed and he was charged rental fee on his Jag)

It's your call, but me personally, I would just give them the $900...and no I am not in the car industry.

Novice

I agree with you AC. I learned a lesson. DO NOT lease a car in MD, especially for a short lease!

TLGator

Hmm...this doesn't sound right to me.

I'll have to get out my lease contract and check it out. I don't believe there was any such language in there. When I signed the lease, they had already checked my credit, gotten the approval, determined all the numbers, and when I drove that car off the lot I had leased it. But, I could be wrong. I'll check my lease and post tomorrow.

Novice

While we are on this topic, does each dealer manipulate the money factor? I mean is this one of many ways how they make money? I know that the residuals are fixed and pre-determined.

AC

Yes. The dealers are given a certain money factor that they are "charged" by the financing company.

Once a dealer misquoted a lease to my brother in law and the only way to get it to that number was by lowering the money factor.

TLGator

OK, I got out my American Honda Finance Corp. lease contract and read the whole thing - every single word. Not sure I even did that when I signed it.

(I needed to get it out anyway, since it ends in two months and I wanted to review the residual and other numbers.)

Anyway, there is NOT ONE WORD in there, front or back, about the lease being "conditional" or "subject to approval" or anything else even remotely like that. It's a contract - and it was a done deal the moment the finance guy and I both signed it and I took the keys and drove the car off the lot.

Which means...had there been a mistake in the dealer's favor, I would have been out of luck. For example, I got them to agree to give me $3000 trade on my old car, so let's say they accidentally, honestly, only put $2000 cap cost reduction in the lease, and I signed it. Oh, well, too late, my bad. Do you really think if I called the dealership a week later and said, "Hey wait a minute, we agreed on $3000 and you only gave me $2000," that they'd change the numbers? I highly doubt it.

The reverse is just as true - if the dealer makes a mistake in your favor, too bad for them.

In an ideal world where we all treated every other human being like our beloved brother, maybe that's not the way we'd handle issues like these. Then again, in such a world we wouldn't need contracts in the first place.

In the real world, the dealer almost never makes a mistake on these financing deals, so when they tell you later they did and you owe them money, it's almost always a scam.

Could this be a case where it really was an honest mistake and an honest person like Novice who wants to make it right should do so? Yes, there's a small chance this could be such a case. Which is why I still recommend getting the dealer's request in writing, on a signed letter, so you can see what they are talking about.

In the meantime, get out your lease and read it over. See if there is any "subject to financing approval" type language in there. I doubt it. The financing approval was obtained BEFORE they let you sign the lease and drive the car away.

Good luck.

AC

Good eye!

I really do believe it was an honest mistake. I think when you're talking TAX, there is no way out of it per say. In my field, if someone forgets to tax me, they can get it back anytime, or file exempt and submit you to Dept. of Taxation in which then YOU are liable for the tax anyway.

KilroyR1

I have bought a few bikes and now a car out of state (although, never in NJ). I have never paid tax, nor had the chance to have the dealer pay the tax on my behalf and process my MD title and tags. If your NJ dealer did this, that's cool - I never knew this could be done.

To answer your question, there is no advantage to doing this yourself (although you wont have to pay the processing fee). When you buy a used car from a person, you have to pay at the MVA as they don't work directly with them.

Enjoy your car, I'm sure you will.

Don