I'm hoping to understand this a bit more as I'm trying to lock down financing before taking delivery in the next few days. I'm looking at the lease numbers in my application, and I'm noticing a Sales Tax line item under "Additional Charges" that seems to increase as I increase my Amount Due at Signing and lower as I decrease my Amount Due at Signing. My total cost of vehicle remains static and it seems a bit unintuitive that my one-time sales tax increases if I'm increasing my drive-off amount? I see a similar line item on paperwork for my lease of another vehicle, so I'm just trying to understand this a bit more. Can anybody help?
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Lease Question (Sales Tax)
- Thread starter RG129
- Start date
Because on a lease (in CA) you pay tax on the portion of the car you are paying during the lease, calculated up front. If you increase your down payment (which does not change the amount you actually pay to rent the car for the lease term), you lessen your monthly payment but that tax still needs to be collected.
In other words, any down payment includes tax. Increase your down payment, you will also increase the amount of tax you are paying "up front" although the total amount of tax over the lease term will be the same (unless you move or something that re calculates taxes).
you are paying it either way, either up front with more down payment, or "as you go". If you pre paid the entire lease, the entire amount of tax due for the term would also be collected.
This is all relative to a lease in CA, because lease taxes are handled differently by different states.
In other words, any down payment includes tax. Increase your down payment, you will also increase the amount of tax you are paying "up front" although the total amount of tax over the lease term will be the same (unless you move or something that re calculates taxes).
you are paying it either way, either up front with more down payment, or "as you go". If you pre paid the entire lease, the entire amount of tax due for the term would also be collected.
This is all relative to a lease in CA, because lease taxes are handled differently by different states.
Thank you so much for the clear explanation! I'm aware of paying sales tax on the monthly payment, but this makes much more sense that we pay sales tax on the entire amount of the fixed depreciation, split between the portioned monthly payment and the drive-off. I just never realized that it gets divided into those separate portions.
My typical anxiety is rising as I'm close to finalizing another large purchase in my life and I have another question: Does the "Monthly Payment" amount include Sales Tax (CA)? In the Price Details of my lease terms, it has a completely separate line item for Sales Tax, and I just want to confirm that that amount will not get added to the "Monthly Payment" amount that's listed larger at the top of my lease terms. I'm fine with the stated Monthly Payment, but cannot seem to reconcile the math like I usually can with lease deals. Before clicking confirm on my application to accept the lease terms, it would be easier for me to see the format of the standard lease or financing agreement, with the Gross Capitalized Cost, Cap Cost Reduction, and all the other numbers which lead to the Base Monthly Payment + Sales/Use Tax = the "Monthly Payment" that Tesla is showing me with the numbers. Can anybody help? (Tesla Customer Service is closed on a Sunday evening, otherwise I would have called).
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