Cali Taxes Part Deux...Lease/use tax ?
 

Okay, interesting & probably life saving question here:

I'm planning on "leasing" the Cobra through Astra leasing (long story). Part of the monthly payments will be the California "Lease/Use Tax". About $50 per mo.

Please can someone tell me that this Lease/Use tax NEGATES me having to pay SALES tax when I register the vehicle in California.

It works out to about the same amount over the life of the loan (about $3,600). I was getting ready to pay this chunk 'o change come registration time. If I didnt have to, that would save me the inevitable flailing at the hands of my boss/wife/dungeon master.

Oh, Please,pleaseplease....

Initially, when you lease the vehicle, the title will be in the leasing companies name and will continue so until you either terminate the lease or purchase it outright from them.

When you terminate the lease and purchase the vehicle, you will be asked to pay the sales tax on the THEN purchase price (depreciated value). Not the original purchase price, as your monthly payments have been paying the sales tax to get you to the depreciated value that you are now purchasing outright.

Unless you have leased the vehicle for so long that the residual value is zero. Then you will owe no sales tax when you transfer the title.

You are going to pay sales tax on the full purchase price one way or the other.

The only tax collected at lease inception is the equivalent of sales tax on the 1st monthly payment based upon the garaging county for the vehicle,and is adjusted if you relocate. The same tax rate is also applied to what is termed "capitalized cost reduction" if any is applicable (lease terminology for "downpayment"). Then as you progress through the lease the same sales tax is collected on each subsequent payment. If you ultimately purchase the car at lease end (be ABSOLUTELY SURE this option is in the language of the lease contract, and you fullu understand ANY additional fees due at lease end) you will be charged the entire amount of sales tax on the agreed upon value at the end of term. The same rates and conditions will apply. At that time the vehicle ownership transfers from the lease company to you. Until then it belongs to the lease company and you are in efffect renting it. You will also need to consider Insucance costs as they many times are higher because the lender will require higher liability limits to protect their interests. You will not have to initially pay any large lump sum of tax other than what I have described. Overall the lease in dollars and cents will cost you more than if you purchased it, but often times the monthly payment is all that anyone considers. Most lenders no longer require a security deposit either. Just 1st month payment, DMV fees, and cap reduction along with applicable tax on cap redution.

Good luck....

Are you sure this is a smart decision?
 

I won't bug you about it, as you are a grown man, but are you really sure this is a smart financial decision? Not to stick my nose in where it doesn't belong, but it sounds like you're not flush with cash, nor equity in real estate (which some folks use to purchase their Cobra). Are you sure it wouldn't be economically smarter to just stash your savings for a while in a dedicated "Cobra account" and wait until you can comfortably afford it?

Uh, oh!

I smell trouble.

I don't want to rain on anyone's parade, but all you have to do is open your newspaper and there's a story every few days about someone who's gotten in over their head, can't cope mentally, and does something horrific. There was another one just this morning (the CFO of Freddie Mac). Well, I've raised the point... I won't dwell on it.:o

Those that don't learn from history are doomed to repeat it.

I think Benny Hill once said that.

Nah, no trouble. Just clarifying details. I just got off the horn with the DMV & I now know exactly where I sit.

The thing is, this is not a normal vehicle purchase. If I were getting a Corvette, it would be a simple matter of getting the bank loan.

Extra hoops have been added as many of the normal Cobra specific funding sources have withered away with the economy, & every other bank I've talked with just wont touch a replicar.

Got plenty of disposable income, most of it goes into savings. No bills or debt other than the house. Hell, I just paid cash for a brand new Honda minivan. Figured if I was ever gonna do it, nows the time. Prices are only gonna creep back up, & I SURE cant see myself spending 70k for one of these.

35k, Yes. 70, No.
So I'm jumping through a few hoops. Wifey says Go for it! So I go.
:)

Lude,
Financial matters completely aside, do you believe if you acquire the car in this manner (it belongs to the lessor until you buy it or return it) that you will leave it un-altered in any manner?
Speaking for myself, these cars are all about personalization, modification/improvement.
My car has been a (an enjoyable) work in progress for two decades+. Are you that disciplined?
BTW, you can own/build a very nice FF (for example) for $35K. Wouldn't that be a better route?

Edit: Found this on our homepage after I made this post-just an example...
http://www.clubcobra.com/classifieds...p?product=2109