Lease Termination

[Lindyrect]

I finally terminated (early) the lease for my 2007 CX-9 GT and purchased the vehicle, but what a headache.

Reason for early termination is that I will be leaving the country on military orders and wanted to take the vehicle with me. Funny thing is that the dealership was trying to charge me an early termination fee even though I am purchasing the vehicle and charge me taxes on the vehicle. According to the Servicemembers Civil Relief Act of 2003 I can legally terminate my lease early due to the fact that I have both orders overseas and they are longer than 180 days. I explained this to the finance manager ahead of time to let him know that if he pissed me off too much I would just drop the vehicle there and call it a day, oh and good luck trying to get a dime out of me. (eekfu)

Since I am not really like that, and I like the vehicle, I called Mazda American Credit (MAC) with the finance manager next to me. MAC stated that since I, the customer, am terminating my lease and purchasing, I cannot be charged a termination fee regardless of early termination. Of course the finance manager wanted triplicate copies signed in blood from MAC. So finance manager says fine we will just charge you with the sales tax. This is when I pull out my original sales agreement and show him that I was originally charged sales tax for the lease and stated that he can not double charge me.

Now the kicker here is that in Maryland your license plates are registered to the leasing company and when you buy the vehicle it is not as simple as swapping the plates over to you. Oh no this would be too easy. You have to get brand new registration and plates $200+. Guess I shouldn't have paid for the two year renewal stickers in October.

Long story short, after my rant, by careful of dealerships. I don't know if it is incompetence or just how they make some extra cash???

 

[petesamprs]

Good info. I've leased two cars before and it does get painful if you need to get out of them early, but works out great if you have good clarity on your time period and mileage use (and if car values plummet during your lease!).

Is it easy to bring your car w/ you outside the US (I assume outside of north america)? Does the military deal w/ transporting it? From a hassle perspective, isn't it easier to just dump the car (assuming you don't have to pay fees because of the servicemember act) and get a new car wherever you are going?

 

[cccx9]

I finally terminated (early) the lease for my 2007 CX-9 GT and purchased the vehicle, but what a headache.

Reason for early termination is that I will be leaving the country on military orders and wanted to take the vehicle with me. Funny thing is that the dealership was trying to charge me an early termination fee even though I am purchasing the vehicle and charge me taxes on the vehicle. According to the Servicemembers Civil Relief Act of 2003 I can legally terminate my lease early due to the fact that I have both orders overseas and they are longer than 180 days. I explained this to the finance manager ahead of time to let him know that if he pissed me off too much I would just drop the vehicle there and call it a day, oh and good luck trying to get a dime out of me. (eekfu)

Since I am not really like that, and I like the vehicle, I called Mazda American Credit (MAC) with the finance manager next to me. MAC stated that since I, the customer, am terminating my lease and purchasing, I cannot be charged a termination fee regardless of early termination. Of course the finance manager wanted triplicate copies signed in blood from MAC. So finance manager says fine we will just charge you with the sales tax. This is when I pull out my original sales agreement and show him that I was originally charged sales tax for the lease and stated that he can not double charge me.

Now the kicker here is that in Maryland your license plates are registered to the leasing company and when you buy the vehicle it is not as simple as swapping the plates over to you. Oh no this would be too easy. You have to get brand new registration and plates $200+. Guess I shouldn't have paid for the two year renewal stickers in October.

Long story short, after my rant, by careful of dealerships. I don't know if it is incompetence or just how they make some extra cash???

Which dealer was this?

 

[Lindyrect]

To answer the dealership question: Ourisman Mazda in Laurel. Same dealership that refused to address my "clicking" issue until I dumped $750 on new brakes and rotors first.

Taking a vehicle out of the United States is not that hard. That is if you have it financed with anyone else but Mazda. I did not even get to look at rates for finance with Mazda because I was told right out we will not let you take it out of the US. My financial institution has a form you can fill out online and they send you an official letter that you can bring to the transportation office (required if leased or loaned). The Military will ship one vehicle at no cost to you, and two at your own cost.

Buying a vehicle overseas is tough. If you buy someone elses used beater there can be some problems (reliability). It also gets tough when buying foriegn vehicles because of extra taxes and fees and then the question comes up, how will you dump it off for next transfer without putting yourself in a bind for time i.e. taking a loss. I know if I bring my vehicle overseas I am confident with my prior maintenance and I can actually sell it to another American there for more than in America. Well maintained American vehicles fetch a good price overseas or even crappy ones.

 

[resqguy]

I don't how you were charged Sales Tax on a Lease. You only pay Sales Tax on the amount of each payment. If they collected all that up front then you should get a refund on your remaining payments.

 

[Lindyrect]

Maryland is wierd like that. As of 2006 they now require sales tax to be paid upfront. In my eyes its already been paid and factored into the existing loan. I dunno any thoughts???

 

[not_too_shabby]

I don't how you were charged Sales Tax on a Lease. You only pay Sales Tax on the amount of each payment. If they collected all that up front then you should get a refund on your remaining payments.

Most states charge sales tax on the lease payments, but not all. Some states like Maryland and Texas charge you sales tax on the purchase price of the vehicle, even for leases. Some states charge you sales tax on the sum of all your lease payments up front. Vermont charges you sales tax on the depreciation amount so that you are not paying tax on the interest portion of your lease payment.

In this case I think the lease and purchase are treated like two seperate transactions, hence the double tax.

 

[petesamprs]

Most states charge sales tax on the lease payments, but not all. Some states like Maryland and Texas charge you sales tax on the purchase price of the vehicle, even for leases. Some states charge you sales tax on the sum of all your lease payments up front. Vermont charges you sales tax on the depreciation amount so that you are not paying tax on the interest portion of your lease payment.

In this case I think the lease and purchase are treated like two seperate transactions, hence the double tax.

This man speaks the truth. Your leasing company (the owner of the car) owes the tax to the state when you first lease (which they make you to pay). Then when you buy it, you have to pay again since you are the new owner.

I would add that I believe IL also charges tax on the full purchase price.

 

[FrankPA]

PA... land of taxes

Yeah, here's one for you..

Sales tax in PA is 6%, but on leases (only!) it's 9%. So if you're only paying the lease on the depreciation (use) and a money factor, they'll still end up getting sales tax on the total value.

And, oh yeah, you'll pay the 6% on the purchase at the end of the lease, too !!!!

 

[vikefan7]

This is one of many reasons why I like living in Oregon, no sales tax...

 

[Force-1]

Guess I shouldn't have paid for the two year renewal stickers in October.

Perhaps you can request a 1-year refund? I renewed the plates on my '05 Corvette for 2 years in 2007 as I had no intention on selling it. However, my local Chevy dealer had a deal on a new '08 Vette that I couldn't pass up, so I traded the '05 for it. The state of New Mexico sent me a refund for the 2nd year I did not use. They do this as long as you don't go into the 2nd year.

 

[not_too_shabby]

This is one of many reasons why I like living in Oregon, no sales tax...

Oh, but they get you on the income tax side and property tax.