Automobile lease question

[Chocaholic]

About 16 months into a 39 month 10k mi/yr lease on my DD. about 13k mi on it now. Prefer to switch to a company car. Only way out of lease (as I understand) is to sell it myself, ideally at or above buyout cost. Here's my question:

If I buy out my lease early, will I be liable for state sales tax (Ga), even though I paid sales tax when I originally leased the car?

I believe I would have an easier time selling with title in hand and no dealerships to mess with, but don't care to get dipped for 7% twice!

Thanks,

[David McLaughlin]

You paid tax on the portion of the car you were leasing. You will be charged tax on the remainder if you buy it out.

[Christien]

Generally speaking, that's the difference between leasing and purchase financing. With leasing they own the car and you pay sales tax with your monthly payment, thus on the portion of the car you've paid for, and would pay tax in the balance on payout. With purchase financing you borrow money to buy the car, including all sales tax up front, and no sales tax on buyout.

[techweenie]

You can try leasetrader.com or swapalease.com

There are people willing to take over your lease. Some leasing companies make that relatively easy, some are just brutal to deal with. Check out those sites and see if your lessor requires a fee just to credit check the candidate to take over the lease. Also, by the original lease rules, you could be liable still, even after they hand it off, and they sell you "insurance" for that.

A bit complicated, but I successfully handed off a lease several years ago.

[Steve Carlton]

As said above, you've probably only paid tax so far on the payments you've made plus any cap reduction and acquisition fee when you started the lease. I've seen contracts where you pay more tax up-front as well. Look at your contract or call the lender who funded the lease.

In CA, it's possible to pay off a lease to get the title in hand, but technically they only allow you 10 days to sell the car before the tax is due from you (and again from the next owner). Bottom line is you need to speak with the agency in GA responsible for sales tax. In CA it's the State Board of Equilization.

It's quite possible that someone might want to assume your lease. Ask the lessor if the lease can be fully assumed without any secondary liability to you if they flake out. This would certainly require the next lessee to apply with the lender for approval. If your car is an attractive payment for what it is, you could collect some money from the person assuming your lease. If it's not, you can make it attractive by giving them some cash.

Even if you're selling the car, have the buyer make out a verified cashier's check to pay off the lease or do a wire transfer. It's actually easier if the buyer is taking out a loan to buy the car, as their lender knows how to handle it in a reliable way. That way you know the buyer's funds are paying off the car and you're not risking getting stuck with the sales tax. It should be entirely possible to pay off the lease without you paying any more tax.

[krystar]

Originally Posted by David McLaughlin

You paid tax on the portion of the car you were leasing. You will be charged tax on the remainder if you buy it out.

check with your local state laws on this. i know IL (f'ed up), you pay sales tax on new value of car when you start the lease. you also pay sales tax again on residual value if/when you buy out.