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Car lease question?

by Willy / July 21, 2007 12:47 AM PDT

Why do you pay taxes& title fees for a leased car. When you lease you don't own the car, you're leasing it. Doesn't the real owner of the car(dealership) have to pay all that? If this was a house/business you lease, you don't pay such fees(that I know of). Notice, i didn't mention the plates as you do pay for that, but that's open as well following the logic I prescribed. Correct me or point me to the light.... Willy Happy

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I dunno.
by Angeline Booher / July 21, 2007 1:55 AM PDT
In reply to: Car lease question?

I do rent my cable box and modem, so that its taxed. I am also taxed on their services to which I subscribe. But I don't have to pay for repairs.

But I don't know if the dealership is also "providing a service". Or is t looked upon as a loan?

Another question:

if a person decides to purchase the car at the end of the lease is the adjusted price taxed again????

Angeline
Speakeasy Moderator

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because
by woodygg / July 21, 2007 2:03 AM PDT
In reply to: Car lease question?

the government says it's taxable... i don't know for sure (i could find out, my friend owns a dealership.... but i'd never lease a car, way too expensive) - but the dealership is reselling the car, therefore they probably don't pay taxes - generally only the end user pays the tax.

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Makes no sense. Is this for real?
by Steven Haninger / July 21, 2007 3:48 AM PDT
In reply to: Car lease question?

If so, it sounds like it's some sort of reimbursement thing to recoup some business costs. The general term used is "unbundling". I could think the dealership might try to lure a customer in by offering lower monthly lease payments and spring these charges on them during the negotiation session. If you add those in and divide by the number of months in the lease contract, that gives you the actual monthly cost. You know there's more to any deal when the advertisement has too many of these (*) after every cost or incentive that's offered.

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i shouldn't say in all circumstances...
by woodygg / July 21, 2007 3:52 AM PDT

my friend who owns dealerships loves it when people lease cars... there's all kinds of hidden costs that are not required to be disclosed.

it's a very expensive way to go, but some people want to drive a new car every few years and are willing to pay the high price. that's okay, it's the american way. spend spend spend!!! (i'm much more conservative - i buy used (occasionally new) and drive it for 8-10 years - i'll also retire 5 years earlier).

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Yes, I think you are correct about hidden costs
by Steven Haninger / July 21, 2007 4:10 AM PDT

You are dealing with two business organizations instead of one so you get two hits in the area of business costs. First, the dealer "sells" the car to the leasing operation which is usually just another office in at the dealership. The price of that transaction will be shown as the full sticker plus dealer installed options. You don't get to negotiate these down and, depending on the vehicle and factory incentives, it could be a fairly large sum and generally at least $1500 or more...sometimes much more. The dealer also gets the full factory hold back as well and makes out like a bandit. If the lease company makes you pay it's taxes and title fees, that's pure profit. There are also documentation fees which tend to be fixed. These are the charges for someone to type up the paperwork including your receipt and those which need to be sent to apply for title and license. Basically it's for secretarial work that takes no more than 1/2 hour in my estimation. In my area, the fixed cost all dealers now charge is $250.....Ouch!!. Now, I also wonder with the lease contract if you have to pay documentation fees twice or at a higher rate. These fees must easily be 90% profit and are, in my opinion, just some of the costs of doing business that are being unbundled. Look at some of the service charges you get when your car is in for repairs. They automatically add some amount for the general use of supplies such as rags, lubricants, etc. I've wondered when restaurants would start doing that with our dinner bill...adding fees for busing the table and washing the tableware, etc. on top of menu prices. It's all the same concept to me.

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there are many hidden costs...
by woodygg / July 21, 2007 4:22 AM PDT

however, you can negotiate them... the problem is they're hidden, so it's hard to negotiate something you don't know about!

btw, the dealer don't always get the holdback... there are many variables that impact this. the primary one is volume...

the bottom line to me is a dealer is simply a reseller - they add very little value. therefore i am willing to only pay them a small amount of money for this service. if they won't deal, there's one within 20 miles who will! Happy of course if you're out in the boonies, that becomes a little different issue...

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License
by James Denison / July 21, 2007 7:24 PM PDT
In reply to: Car lease question?

If you borrow a gun to go hunting you still have to purchase your own license to do so, and pay any stamps for particular game. Same thing for fishing license, even if you borrow the tackle from a friend. The only instance I know where the latter doesn't apply is going on a charter or party boat, since it's a party fishing license to the boat owner for the particular business. When you lease a vehicle aren't you also responsible for the gas you use and the oil changes and to keep it up till the lease expires? A car license is a road tax and you are the one using the vehicle on the road. The dealer is renting the car, but the responsibilites of the car are to you. The dealer doesn't provide your insurance, although he will require you to maintain collision and comprehensive to protect "his" property while you are leasing it. Since you are responsible for your use of a lease in every other way, then why would you feel you aren't responsible to pay the road and other taxes for it's use, and they are usage taxes.

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I can partially understand but
by Steven Haninger / July 21, 2007 10:11 PM PDT
In reply to: License

borrowing fishing tackle from a friend and also borrowing his car doesn't mean you need separate tags to drive it. You should already be a licensed driver and have paid that tax. The fishing license gives you access to the fishing holes. Paying tax on gasoline (which you will do with a leased car) is where most of the road use fees come from. You've already paid the taxes. I'd think the car tags should always be traceable to the owner so the lease company provides those. Some states have higher and some have lower fees for such. In Ohio, our tags are in the 40 dollar range. Some states tax on the value of the car as "personal property" and those are often much higher. If the leasing company operates in these states and must pay these higher taxes, I can understand building those into a monthly fee that would be known up front.

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Then why
by Willy / July 22, 2007 6:24 AM PDT
In reply to: License

I don't buy that. If you actually rent a car, you don't buy the license plate, that's already provided. There is a service fee or tax on top of that because of a service. How, then did it become so much on the leaser to pay all of these fees or at least most of them, the only difference is the length of time when leasing. Yeah, I understand the typical maintenance costs, but if the engine blows-up whose fault is it. Does the warranty apply to the leaser or leasee? If this was a house and the plumbing broke, whose responsibility is it, usually the owner unless of careless to pay.

FYI - I don't lease, too many pitfalls or unknowns become known too late. Yeah, i read some of those leases, man it doesn't hurry to explain itself. Wink -----Willy

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You are actually renting the car for years
by Diana Forum moderator / July 21, 2007 10:35 PM PDT
In reply to: Car lease question?

rather than days. You pay taxes on anything you use whether you are renting or buying.

When you rent an apartment, the propery taxes are included in the rent. Same when you rent a car or furniture. Everything is plus tax. Even the annual member fee at Sam's is plus tax. The governor has to get his/her share.

Diana

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Yes you are correct. It's always been this way
by Steven Haninger / July 21, 2007 11:33 PM PDT

but more an more businesses are separating these charges from the total package to keep the advertised price as low as they can. But the $199 a month lease today may be more than the $199 a month lease of yesterday. It's a way of increasing the price while the user's perception is that it's still the same as before. Notice that your 1 lb can of coffee you bought yesterday for 2 bucks might still be two bucks today but have been reduced to 13 oz. The store can advertise that the price per can has not gone up.

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