Ever had your lease payment go up because of a state sales tax increase?

[Rio Rebel]

Two months into our lease, my wife's lender just billed us another 1% from an Indiana sales tax increase.

First off, I realize that this isn't a huge amount of money, and there is a clause in the lease which apparently reserves the right to pass on the tax increase to the leasor. So comments like "you should have read your lease" or "if you can't afford the car, don't lease it" aren't helpful or appreciated.

But in my mind, you lease a car based on monthly payments. And the deal is made on a certain date, after which the leasor can't return the vehicle without penalty. So it doesn't seem entirely fair that the leasing company can just pass on the increase to the leasor. The state isn't charging me tax, they are charging the leasing company. So why am I responsible for the difference?

I guess I'd have less of a problem with it if it had been made clear at signing that the monthly payment was estimated based on current taxes. Now, both the financing agent and the dealership both have a "too bad" attitude about it.

Ultimately, I don't intend to fight it any further. We're talking about $5 a month. But it seems deceptive to me.

 

[spidey07]

The only way they could ask for more was if the tax increase is somehow retroactive (doubtful). Other than that the sales tax is most likely already included in your payments. Check your lease agreement, there should be an area/section dealing with sales tax. I'd fight it on principle alone. The sales tax was already calculated and that number is FINAL when the car was leased.

If it were property taxes, then I can see that as they change year to year. But sales tax is a one time deal (except if you decide to buy the car off the lease then you have to pay sales tax again - BS!!).

 

[nickbits]

That is normal. Your total lease payment is the raw lease payment + taxes. Taxes are calculated on each payment; it has nothing to do with what the tax was when you signed the lease. That is different from financing where the taxes are paid up front and you are just repaying the loan balance.

PS. That works both ways.. in my case my lease payment went down.

 

[vi edit]

I have nothing constructive to offer just sympathy on leases on sales tax.

In '05 we leased a Highlander in Iowa. Iowa makes you pay sales tax on the % of the vehicle used. So we "used" about 10K of the $28k of the car. Paid around $600 in sales tax in Iowa. ($10,000 @ 6% = $600).

The next year we matched to a residency in Nebraska. Nebraska charges you tax on the payments. They don't care what you paid on the car already. So now we took the base lease payment and tacked on another 7% in sales tax on a $300 payment.

The year after that my wife took an offer in IL. So thus far we have paid $600 in Iowa and another $250 in NE. To plate it in IL we have to comply to their assinine lease sales tax laws. You pay on the WHOLE THING. So now we were stuck paying sales tax on a 28k car minus the $850 we paid already. That ended up being another $450 kick in the nuts.

And in IL, if you wanted to buy the car at the end of your lease...you paid sales tax AGAIN on the full residual buyout of the vehicle...even though you paid it in full up front.

Double dippin SOB's...and we're still 3 billion in debt.

/rant off.

Cliffs Notes:
Don't lease if you plan on moving to a different state
Leasing and state taxes have you by the short and curly's

 

[Rio Rebel]

Originally posted by: spidey07
The only way they could ask for more was if the tax increase is somehow retroactive (doubtful). Other than that the sales tax is most likely already included in your payments. Check your lease agreement, there should be an area/section dealing with sales tax. I'd fight it on principle alone. The sales tax was already calculated and that number is FINAL when the car was leased.

If it were property taxes, then I can see that as they change year to year. But sales tax is a one time deal (except if you decide to buy the car off the lease then you have to pay sales tax again - BS!!).

I checked the lease agreement. There's a clause in there (shockingly forgotten at signing) that says that the tax is an estimate. So legally, I have no leg to stand on, unless I could show that they had an obligation to make it clear at signing.

If I can just find an attorney that will take it on a 1/3 contingency...

 

[compman25]

My lease payments went down went I moved from CA to OR back in 99 because of the tax. Guess it works both ways.