Something I always wanted to ask..
01-04-2019, 05:54 PM
#12
AudiWorld Senior Member
Thread Starter
01-05-2019, 05:27 AM
#13
AudiWorld Senior Member
Yeah good to know indeed. on a standard lease, there is automatic gap coverage included on the acquisition fee. I wonder if gap insurance is something a customer could buy on his own through insurance in a case of one pay lease
01-05-2019, 01:52 PM
#14
AudiWorld Senior Member
Thread Starter
https://forum.leasehackr.com/t/one-p...question/54569
"At least with Audi and Mercedes-Benz, a one pay lease is not “money down” (ie. cap cost reduction).
In the event of a total loss, the unearned rent and depreciation are returned (pro-rata) to the lessee. The lessee loses the unearned paid tax. My guess is acquisition fees and such are considered fully earned and paid up front, but I’m not sure."
I don't know if that is/was true but it certainly would be nice if that's the case. I wouldn't see a reason why you couldn't get gap-insurance on a one-pay lease through AFS. I know for sure that Progressive also offers gap-insurance as an option "outside" the manufacturer's lease-deal.
01-05-2019, 07:05 PM
#15
AudiWorld Senior Member
Hmm, maybe I was wrong in Audi's case:
https://forum.leasehackr.com/t/one-p...question/54569
"At least with Audi and Mercedes-Benz, a one pay lease is not “money down” (ie. cap cost reduction).
In the event of a total loss, the unearned rent and depreciation are returned (pro-rata) to the lessee. The lessee loses the unearned paid tax. My guess is acquisition fees and such are considered fully earned and paid up front, but I’m not sure."
I don't know if that is/was true but it certainly would be nice if that's the case. I wouldn't see a reason why you couldn't get gap-insurance on a one-pay lease through AFS. I know for sure that Progressive also offers gap-insurance as an option "outside" the manufacturer's lease-deal.
https://forum.leasehackr.com/t/one-p...question/54569
"At least with Audi and Mercedes-Benz, a one pay lease is not “money down” (ie. cap cost reduction).
In the event of a total loss, the unearned rent and depreciation are returned (pro-rata) to the lessee. The lessee loses the unearned paid tax. My guess is acquisition fees and such are considered fully earned and paid up front, but I’m not sure."
I don't know if that is/was true but it certainly would be nice if that's the case. I wouldn't see a reason why you couldn't get gap-insurance on a one-pay lease through AFS. I know for sure that Progressive also offers gap-insurance as an option "outside" the manufacturer's lease-deal.
Actually I just thought of something maybe you know about....so Texas is notorious for charging sales tax on the value of the whole car during leasing, Instead of just the depreciation portion. With that, on a one pay lease, Audi covers 5% of the sales tax and reduces your MF by 50 points. Essentially all a customer pays is 1.25% on the purchase price of the car which is substantial savings. Savings aside though, anyone who leases has now paid sales tax on the whole car so my question is this....
At any point during the lease if the lesee wants to go trade the lease car in for something else, would they be eligible for the tax credit of the “trade in” amount. Again the thought process is that they have paid 100% sales tax on that lease car so it shouldn’t matter if it’s a lease or not.
thoughts?
Last edited by jetsfan101; 01-05-2019 at 07:08 PM.
01-06-2019, 04:15 AM
#16
AudiWorld Senior Member
Thread Starter
At any point during the lease if the lesee wants to go trade the lease car in for something else, would they be eligible for the tax credit of the “trade in” amount. Again the thought process is that they have paid 100% sales tax on that lease car so it shouldn’t matter if it’s a lease or not.
thoughts?
thoughts?
01-06-2019, 04:26 AM
#17
AudiWorld Super User
this was 2 years ago but I think I recall the sales rep telling me that even on a one pay lease the gap insurance is included in the acquisition fee.
Actually I just thought of something maybe you know about....so Texas is notorious for charging sales tax on the value of the whole car during leasing, Instead of just the depreciation portion. With that, on a one pay lease, Audi covers 5% of the sales tax and reduces your MF by 50 points. Essentially all a customer pays is 1.25% on the purchase price of the car which is substantial savings. Savings aside though, anyone who leases has now paid sales tax on the whole car so my question is this....
At any point during the lease if the lesee wants to go trade the lease car in for something else, would they be eligible for the tax credit of the “trade in” amount. Again the thought process is that they have paid 100% sales tax on that lease car so it shouldn’t matter if it’s a lease or not.
thoughts?
01-07-2019, 04:18 AM
#18
AudiWorld Senior Member
The argument for that would be if one has car under financing and owes money to the bank, that's same thing isn't it? Since the bank owns the car too until it's paid off.
If one goes the trade in route on a leased vehicle, the dealer buys it out. If financed, they buy it out from you and the bank. In the lease case, they buy it out from the bank (AoA). Either way taxes on whole amount of the car have been paid, so in theory there may be a condition created for a trade in scenario regardless of who owns the car. The tax transaction is the with the state so the trade in tax credit goes through the state as well. I need to research this further...
If one goes the trade in route on a leased vehicle, the dealer buys it out. If financed, they buy it out from you and the bank. In the lease case, they buy it out from the bank (AoA). Either way taxes on whole amount of the car have been paid, so in theory there may be a condition created for a trade in scenario regardless of who owns the car. The tax transaction is the with the state so the trade in tax credit goes through the state as well. I need to research this further...
01-07-2019, 04:25 AM
#19
AudiWorld Super User
The argument for that would be if one has car under financing and owes money to the bank, that's same thing isn't it? Since the bank owns the car too until it's paid off.
If one goes the trade in route on a leased vehicle, the dealer buys it out. If financed, they buy it out from you and the bank. In the lease case, they buy it out from the bank (AoA). Either way taxes on whole amount of the car have been paid, so in theory there may be a condition created for a trade in scenario regardless of who owns the car. The tax transaction is the with the state so the trade in tax credit goes through the state as well. I need to research this further...
If one goes the trade in route on a leased vehicle, the dealer buys it out. If financed, they buy it out from you and the bank. In the lease case, they buy it out from the bank (AoA). Either way taxes on whole amount of the car have been paid, so in theory there may be a condition created for a trade in scenario regardless of who owns the car. The tax transaction is the with the state so the trade in tax credit goes through the state as well. I need to research this further...
Taxes on the whole amount have not necessarily been paid, because tax laws for leases vary by state. In my state, sales tax is only based on the payment not based on the purchase price of the car.
Most states that I’ve done deals through so far, sales tax
credit only extends to the same individual or entity. Another example, If you own a company, and that company owns a car, and you trade it on a new car that you buy personally - no sales tax credit.
always best to ask your accountant
01-07-2019, 05:01 AM
#20
AudiWorld Senior Member
a leased car is titled to the leasing company...they are letting you borrow the car, that’s it.
Taxes on the whole amount have not necessarily been paid, because tax laws for leases vary by state. In my state, sales tax is only based on the payment not based on the purchase price of the car.
Most states that I’ve done deals through so far, sales tax
credit only extends to the same individual or entity. Another example, If you own a company, and that company owns a car, and you trade it on a new car that you buy personally - no sales tax credit.
always best to ask your accountant