Sales tax added to the adjusted cap cost?

jaysonozog

It’s my first time going over numbers in a lease. Something which caught my attention were the figures I was provided by the dealer... the adjusted cap cost is $42,869:

$40,140 sales price
+ $695 acquisition fee
+ $2,034 total sales tax

Why is the total sales tax being added in the cap cost? It’s my understanding the tax (specific to my state of IL) is charged on the monthly payment and down payment.

Am I missing something?

Michaell

jaysonozog said:

It’s my first time going over numbers in a lease. Something which caught my attention were the figures I was provided by the dealer... the adjusted cap cost is $42,869:

$40,140 sales price
+ $695 acquisition fee
+ $2,034 total sales tax

Why is the total sales tax being added in the cap cost? It’s my understanding the tax (specific to my state of IL) is charged on the monthly payment and down payment.

Am I missing something?

In IL, the tax is calculated against the sum of the payments, any down payment or incentives, and taxable fees (acquisition fee, dealer fee), and collected up front.

You have the choice of:

1. Paying the tax amount when you sign the paperwork; or
2. Adding the tax amount to the CAP cost (which is what the dealer has done)

Going with option 1 means that you'll have a lower payment, but you'll lose the up front tax amount if the car is stolen or totaled during the lease.

Going with option 2 lowers your out of pocket, but does subject the tax to interest (rent charge).

jaysonozog

Thank you.

I’m trying to figure out how they calculated the tax at $2,034 given my total monthly payment (with tax) is $557.

In IL, the tax is 8.25%

Based on my calculations the total tax (with a $2K downpayment which is taxed as well) should be in the area of $1,652

That’s almost a $400 difference.

Michaell

jaysonozog said:

Thank you.

I’m trying to figure out how they calculated the tax at $2,034 given my total monthly payment (with tax) is $557.

In IL, the tax is 8.25%

Based on my calculations the total tax (with a $2K downpayment which is taxed as well) should be in the area of $1,652

That’s almost a $400 difference.

Probably best to ask the dealer for the breakdown

kyfdx

jaysonozog said:

Thank you.

I’m trying to figure out how they calculated the tax at $2,034 given my total monthly payment (with tax) is $557.

In IL, the tax is 8.25%

Based on my calculations the total tax (with a $2K downpayment which is taxed as well) should be in the area of $1,652

That’s almost a $400 difference.

Taxable incentives, possibly?

jaysonozog

kyfdx said:

Thank you. I’m trying to figure out how they calculated the tax at $2,034 given my total monthly payment (with tax) is $557. In IL, the tax is 8.25% Based on my calculations the total tax (with a $2K downpayment which is taxed as well) should be in the area of $1,652 That’s almost a $400 difference.

Taxable incentives, possibly?

No incentives on the xc40. Im waiting for a response on how that tax is calculated- it’s almost as much as the entire cost of the vehicle. (Instead of the monthly payment)