Lease trade in question

[bhenken08]

A local Mazda dealer is telling me my payoff with Toyota has tax included in the pay off. (lease)

He says if i trade in the car into a dealership my payoff should be less.

my current PO is 24,400 essentally he is saying i my pay off should only be 22,277?

has anyone ever heard of this?

[Anonymous]

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@bhenken08 wrote:

A local Mazda dealer is telling me my payoff with Toyota has tax included in the pay off. (lease)

He says if i trade in the car into a dealership my payoff should be less.

my current PO is 24,400 essentally he is saying i my pay off should only be 22,277?

has anyone ever heard of this?

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I'd confirm with Toyota what your payoff is and then listen to them.  They are the ones you have to payoff not the Mazda dealer

[Anonymous]

Where did you get the $24,400 number from? 

Here in Chicago the city charges their own taxes on leases. So if you got that $24,400 number by just multiplying your current payment by the number of payments left that could account for the difference. IOW, if your payment was $330 and your city taxes were $30 and you had 20 payments left, your payoff would be $6000, not the $6600 you'd calculate. 

I'm also trying to imagine what kind of lease you have that has that much left to pay off. That seems awful high. 

[bhenken08]

My credit report shows $9,000 that i owe on my lease. The 24K is the buy out price.

[Anonymous]

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@bhenken08 wrote:

My credit report shows $9,000 that i owe on my lease. The 24K is the buy out price.

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Now it's making more sense. I think I know what he's trying to say. 

Now understand, this can change depending on where you live. But here in Illinois, if you buy a $30K car and trade in a $20K car, you only pay sales tax on $10K. The overall sales tax rate in the city of Chicago is a whopping 10.75%. That would be the difference between paying $3225 in taxes or $1075. 

This is one of the reasons that it's not always a good idea to sell your car to Carmax even though they will offer more than the dealer trade-in. 

[Luscher]

If you buy out your lease it is treated as buying a new car so it will be taxed and tagged again.

[Anonymous]

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@Luscher wrote:
If you buy out your lease it is treated as buying a new car so it will be taxed and tagged again.

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Depends again on where you are. Here in Illinois they finally changed things Jan 1st of this year. But prior to that, on a lease, you paid the sales tax on the full price of the car. So you'd have already paid the full sales tax. 

[Creditaddict]

what he may be saying is that toyota is listing a buyout price including tax for the entire price right now but if you trade it in you won't pay tax on the buyout... we traded in our Kia with over a year left on the lease and my payoff that I printed from kia myself before going to carmax was over $2k more than what they called and got as payoff and what we ultimately did trade in and used as the payoff amount!!!  I wish I had known that before because we would have traded in WAY SOONER!

[bhenken08]

YES! thats exactly what i was asking about. lets hope toyota has tax included.