After a really crappy dealership experience yesterday, which I walked away from TL-less, I am looking at the lease summary the salesperson provided and can't really make any sense of it all.

First of all, the cap cost on paper was 600 bucks higher than what was verbally agreed upon.

Secondly, and I may be completely wrong here, the amount quoted for tax was nearly double what it should have been. How is tax calculated on a lease? As far as I know the only portion that should be taxed is the cap cost + fees - residual (approximately $15k - 16k on a TL). Is this not correct? If my sales tax is 5% then I should have been charged less than $800. The summary shows nearly $1400!

Is it just me or was this guy trying to sneak alitte extra profit in for himself?

I'm glad I walked.

 

Curious, what are your reasons for leasing? Why not buy?

 

Lower payment....and I have a track record of not keeping cars for more than 3 or 4 years.

 

Most likely the dealer "capitalized" the bank fee. It varies by leasing company/bank, but $600 is about the going rate. Don't forget to also check the "disposition" or "lease termination" fee as well; they are generally another $400.

In California you are taxed on your capitalized cost reduction and your monthly payments (including the portion of the payment that does not go to lowering your lease balance). In effect, you are financing your sales tax. I am not sure where you live, but it sounds like it is something similar.

 

www.leaseguide.com

 

In Florida, you pay sales tax on the payment. This is why when you trade in or sell a leased car early, a dealer would pay the payoff but a private party would pay the payoff plus tax on the payoff. It's when you finance the car that you've financed the tax, too, unless you put at least that much down.

 

You pay sales tax every payment. Instead of one lump sum on a traditional purchase