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Midsize Sedans 2.0

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  • backybacky Twin CitiesPosts: 18,727
    I wonder how that affects the number of leases vs. buys in states like IL? Especially for automakers that favor 24 month leases, like Ford seems to do. On a 24 month lease on a $30k car e.g. a well-equipped Fusion, that extra tax could easily add ~$40 a month to the monthly payment... unless it has to be paid up front?!? At that point, buying a gently-used car, maybe a CPO with factory warranty, looks a lot better to me than leasing a new one.
  • stickguystickguy Posts: 14,620
    I would expect it has to hammer it. especially on pricier cars that are heavily subvented.

    2013 Acura RDX (wife's), 2007 Volvo S40 (daughter stole that one), and 2000 Acura TL (formerly son's, now mine again)

  • steverstever Viva Las CrucesPosts: 40,794
    edited November 2013
    And you'd be right. 10% lease rate in IL vs 25% in other states.

    Proposal Would Lower Price Of Car Leasing (WNIJ)

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  • akirbyakirby Posts: 7,699
    The key is getting a heavily subsidized lease so that you're paying far less than the actual depreciation.

    That's how they're able to lease a Nissan Leaf for $260/month with only $1500 down. They're using the government rebates to subsidize the lease.

    Absent big subsidies you'll pay a lot more for 3 3 yr leases than just buying one new vehicle.
  • I agree that reliability is essential compared to a long warranty. The transmission on my '08 LaCrosse went out four months after the expiration of my 5-year warranty. You mentioned numerous attempts at repairing.. Were there attempts to repair the faulty transmission. I had one incident, complete failure of transmission, making it unable to move in drive. My only choices were a new transmission or rebuilt. I chose new transmission. Did you have either of those or just repairing the transmission? Even though my new transmission has its own warranty and I got some compensation on the charges, I would rather have answer to why this happened, especially a few days after preventive change of transmission fuel.
  • explorerx4explorerx4 Central CTPosts: 9,722
    Maintenance and repair also have to be considered.
    Maybe the tires or brakes need to be replaced just before your lease is up or there is body damage the must be repaired.
    If you own, you have more flexibility about those factors.
  • crkyolfrtcrkyolfrt Posts: 2,345
    you only pay sales tax on only the lease payments, not on the total value of the car

    I've been trying to figure this out and after reading all the posts after, I still don't understand this. I have never leased before so not my area of knowledge to start with, but I do know here, that sales tax is calculated on the price of the car..or at least I think so, are you saying that in some states, tax is calc on suggested list PLUS each monthly lease payment regardless of the term? Meaning that short terms would work out against you compared to longer terms? Altho once out of wty, the waters muddy further..
  • crkyolfrtcrkyolfrt Posts: 2,345
    Good points. Whether leasing or buying and enduring depreciation, having a new car every 2-3 years usually has to cost ya.. I would think it rarely turns out to be free-ride like. Certainly those who can have tax right-offs might be able to get a little closer to it making sense, but even a small business can still write-off percentages of private vehicle for business related use. When I was trucking I used 50% of costs on my private vehicle. Some would use 75% or more but I think that might draw attention and hassles of proving that probably backfires a fair bit. I never got questioned using 50%. And could prove it if it had happened.
  • akirbyakirby Posts: 7,699
    With a lease you're not buying the vehicle - Ford is (or the bank). You're only paying for the depreciation on the vehicle over 2 or 3 years but you still need to pay taxes on that depreciation so they're added to the monthly payments. In most states you don't pay taxes on the vehicle itself, only on the depreciation. If you have to pay both then that's a state law of some kind and not the norm.
  • crkyolfrtcrkyolfrt Posts: 2,345
    Thanks, I understand better. But..so what was the difference in that state that the other chap had a break on and leasing made more sense there? Was it VA? I forget who it was. But how did this work differently in that state?
  • backybacky Twin CitiesPosts: 18,727
    If the chap you're talking about is me, then in MN, you pay sales tax only on the lease payments i.e. depreciation. So if for example you make 36 lease payments of $200 a month and there's no down payment, you pay sales tax only on $7200, and you pay it up front (or SOMEONE pays it... hopefully the dealer, not you!). This is true regardless of the total price of the car.

    Trade-ins also come into play, in MN and other states (but not in all states). So when I traded my 2007 Sonata in on a leased 2013 Sonata last year, the trade-in value was deducted from the amount that sales tax was paid on. I wound up paying nothing down, and 35 payments (dealer made first payment) of $47 for my new Sonata. :) I paid no sales tax... the dealer paid the sales tax as part of the deal.

    As someone else noted, in IL and probably some other states, it's different. There you pay sales tax on the full value of the leased vehicle... making leases not nearly as good a deal as in states such as MN.
  • crkyolfrtcrkyolfrt Posts: 2,345
    edited November 2013
    It was IL, not VA that I was thinking of, but yes I think it was you who had it better for leasing. I think tax has to be paid up front here too but I always assumed it was rolled into the monthly lease payment, but I guess the dlr or bank does pay it up front. So somewhere it must still make sense for them, they wouldn't be doing that out of the goodness of their heart.

    Or maybe they claim that tax, (they paid up front) and take it out of your residual value if you have any at the end? It's coming back to me why I find leasing confusing.

    edit- the part that does make sense to me is at least getting a break on the trade-in. But then of course you should since it already had its tax paid when new if it was purchased. Unless it's ON. They get away with murder here. You can buy a car today. Sell it tomorrow, Buy it back the next day, and get dinged for full tax amt each day like it was the first time :(
  • backybacky Twin CitiesPosts: 18,727
    Leasing isn't confusing to me. It boils down to one question: "What's my monthly payment?" (Because I go for leases with nothing up front.) Then I compare that cost to other options, i.e. buying new or buying used, taking into account residual value on the car I'd buy, also the buyout price of the leased car (in case I want to keep it after the lease is done).
  • explorerx4explorerx4 Central CTPosts: 9,722
    I'm from the school that when you lease, you put down as little as possible.
    It's a fiscally conservative way of thinking.
    If you have a trade, take the equity and invested or save it.
  • vservser Posts: 48
    Funny. My wife brought up that point. She said buy it, drive it or five yrs, then give it to our daughter when she's of age. She too young or me to think about it now. Idk.
  • vservser Posts: 48
    I've learned that you should put nothing doesn't bc if you happen to total it, tat money is gone.

    I've also learned that kia charges you 375 as a disposition charge when you hand in the car. Also there's a fee if you want to buy your leased car. I'm back on the buying side of things.
  • cskicski West Springfield, VAPosts: 1,284
    edited November 2013
    I don't know about "giving" my Optima to her! She is gonna be borrowing till at least 18. In Virginia they get a learners at 15 yrs 6 mos on their way to a full license at 16 yrs 3 mos but with restrictions till 18 yrs. It's a graduated program.

    Back in the day, I got my learners at 15 yrs 8 mos, and at 16 got a full license, no restrictions. By then I had been already driving tractors, motorcycles, and the hay truck (manual trans) that we called Brutus. A car was easy in comparison.

    However, that was 27 years ago when the county population wasn't 1.2 million. More like 200,000.

    Chris Skalski: Network Engineer 2012 Kia Optima EX

  • cskicski West Springfield, VAPosts: 1,284
    What scares me is the dealer charging me for every scratch & ding on the car, and having to pay for the mileage if I go over. Is that still even an issue?

    I know that a lot of people in Fairfax County liked to lease in the past because of high personal property tax's. Since the vehicle was not owned by the driver, the manufacturer had to pay the 4.5% annual tax based on the book value of the car. So, the state made us pay sales tax on our cars year after year after year. It was hated by all, so the law changed and the tax is now more affordable at about 2.5%.
    .
    Then there's the unknown factor. What happens if myself or wife gets laid off? What if our credit suffers? Then I would not qualify for another lease with attractive terms, and all of a sudden I am sporting an 86 Ford Tempo.

    Anyway, I don't think I will be leasing anything soon.

    Chris Skalski: Network Engineer 2012 Kia Optima EX

  • dudleyrdudleyr Posts: 3,447
    Back when I lived in Fairfax county 20 years ago, the people with expensive cars would not get the county sticker as it was much cheaper to pay the fine.

    In South Dakota we have no county stickers, no inspection stickers and no emissions stickers. Nothing at all on the windshield. Refreshing change. Costs less than $50 a year to register a car.

    Very driver friendly - 75 mph speed limit with no points for speeding. Can drive by yourself when you turn 14 (if you take drivers ed).
  • backybacky Twin CitiesPosts: 18,727
    Leasing isn't for everyone.

    I only do it when I can find a great deal, low payment with nothing up front except maybe the first payment. It has to make financial sense to me to do it.

    Dents/dings have never been a problem for me. I've either kept the car (sometimes reselling it for over the residual value since I don't drive many miles) or traded in on another lease. I did that this summer with my 2010 Sentra that was coming off lease. Had several dealers clamoring to take it off my hands and pay off NMAC even though it had a few scratches/dings, but nothing major. Handed it over to the Kia dealer on a Rio lease. That avoided the disposition fee on the Sentra too. :)
  • nyccarguynyccarguy Stamford, CTPosts: 7,655
    As I was pumping 18 + gallons of 87 into my wife's Pilot @ $3.35/gal (thanks to $.30 off/ gal from stop n shop rewards), a guy pulls up in a very handsome looking, what I know now to be, Corsa Blue Kia Optima. This car is definitely eye catching. The LED tail lights, chrome accents, projector beam (xenon?) head lights, the chrome wheels. Very sharp. Add to it that I don't see too many peaked my interest enough to come home & "build my own" on the Kia website. An Optima SX Turbo with no options definitely fits the bill. Very nice car for $28K sticker.

    2001 Honda Prelude Type SH/ 2011 BMW 328xi / 2011 Honda Pilot EX-L w/ Navigation

  • cskicski West Springfield, VAPosts: 1,284
    I sold my jeep outright and then paid for a year of insurance on my Optima. It really helped out. As you guys mentioned, collision insurance is very expensive on a new car. By the time I was up for renewal this time, (after two years) the car was worth less money so I was able to move to Liberty Mutual for a savings of $60 a month over Progressive. That is $700 a year saved. (I had a ticket drop off too, but Progressive insisted that it wouldn't drop off for 6 more months).

    Chris Skalski: Network Engineer 2012 Kia Optima EX

  • cskicski West Springfield, VAPosts: 1,284
    edited November 2013
    ....and if you want a gently used Corsa Blue Optima you can get a CPO 2012 SX w/ around 25,000 miles for around $20 grand.

    I love my non-turbo 2012 EX. After 2 years and 23,800 miles I have had no issues with it.

    We have a rewards program too. The local Giant Food ad Shell partnered together. 10 cents a gallon on every $100 we spend. We had 90 cents off last time and it cost $2.05 a gallon here in DC/North VA. (I have 3 kids + my mom and my cousins share).

    Chris Skalski: Network Engineer 2012 Kia Optima EX

  • cskicski West Springfield, VAPosts: 1,284
    I think folks on this board would have been appalled at paying the sales tax on their car over and over and over again like we did here in Fairfax. People that could afford expensive cars also usually registered their cars at a second home or a relatives. It was rampant. The masses can't afford a $500 tax bill on top of a $400 car payment. We still have to pay, but at 1/3 of the rate back then. Plus gas, plus maintenance, plus registration and plates.

    I envy your being able to live out in SD. It must be beautiful. Is there a good road for testing out your cars specs? Like top speed? LOL

    Chris Skalski: Network Engineer 2012 Kia Optima EX

  • explorerx4explorerx4 Central CTPosts: 9,722
    edited November 2013
    Here in CT, you pay sales tax when you buy a car. You also pay property tax every year, based on vehicle valuation and your town mil rate.
    Last year the tax on our oldest vehicles, 1991 and 2002, went up!
    Didn't really drive the Fusion this weekend, but I did wash and wax it, so it is looking sweet.
    Rain tomorrow, so it's staying in the garage.
  • cskicski West Springfield, VAPosts: 1,284
    edited November 2013
    Yes. Same here. Someone has to pay for those new parkways and "hot lanes" for the rich, why not you? Your cars are paid for...you can afford it!

    My property tax bill should be arriving very shortly, and I would be happy to share the valuation and the tax amount. If folks are surfing these boards and are considering a gently used 2 year old mid size, they should know how much their actual costs could be.

    I don't want to be too critical, but we need to remember that a government is nothing more than a body of ungoverned individuals.

    Chris Skalski: Network Engineer 2012 Kia Optima EX

  • igozoomzoomigozoomzoom Waleska, GeorgiaPosts: 791
    A new law went into effect on 03/01/2013 here in Georgia that actually saves most of us a lot of money! Vehicle sales are no longer subject to Sales Tax (7% in most counties). Instead, a Title Ad Valorem Tax (TAVT) is due on the net sale amount. The TAVT rate is 6.5% for 2013, 6.75% for 2014 and 7% for 2015. In addition to replacing Sales Tax, we no longer pay annual Ad Valorem tax when we renew our tags. It's $20 per year from now on for a standard GA plate.

    I bought my 2012 Mazda CX-9 in 11/2012 and all vehicles sold in 2012 can 'opt-in' to the new TAVT program. If I keep it for five years, I'll save over $2200 by opting-in, which I have done.

    Under the new law, private sales (person-to-person), inherited or gifted cars and new residents moving into the state will all be subject to the TAVT. They didn't pay Sales Tax in the past.

    There's only one part of the law that makes no sense and it is hurting the leasing business. Leased cars are charged TAVT on the FULL VALUE of the vehicle. So if someone leases a $50k car for 36 months, $3250 (6.5%) will be added to the total lease amount. That would increase the payments by $90 per month!
  • crkyolfrtcrkyolfrt Posts: 2,345
    I was really taken aback when I first read the other day that some states charge an annual tax on you vehicle's BB or whatever value. I thought ON was bad, and is still given the huge % but this having to pay anywhere near $500 annually on your average 20+ k$ car would be tough to stomach. Now...of course we pay property taxes too, but it is on our 'property'...the house, garage, improvements, paved drive, central A/C, fireplace, covered/screened porches etc etc

    I guess grass isn't always greener..

    So what would you pay in tax on your Optima if your kept it 10 years?
  • cskicski West Springfield, VAPosts: 1,284
    Yes, but it's hot in Georgia and full of zombies!

    (If you don't get it you can yell at me)

    Chris Skalski: Network Engineer 2012 Kia Optima EX

  • MichaellMichaell ColoradoPosts: 5,505
    We also have a personal property tax here in Colorado. For new cars the taxable amount is 85% of the MSRP. Year one is 2.1%, then decreases each year to year five, where it levels out at about 1/2%.

    The good part is that the tax amount can be deducted on your federal taxes.

    BTW, no sedans in my household. One CUV and two hatchbacks.

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