Pay off or trade a lease mid term?

[texasbryan]

Has anyone confirmed that you can pay off a Rivian lease or trade a leased Rivian mid term as though it were a purchase AND keep the $7500 tax credit?

If so, it seem like this would be a better option than a conventional purchase. What am I missing?

Thanks!

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[misterturbo]

If you get a payoff estimate from Chase, it will show you the exact amount you would owe at the time you want to buy it out.

In most scenarios, the gotcha is that you'll have to pay taxes again when you buy out the lease. This can be a large sum of money depending on your state.

 

[texasbryan]

If you get a payoff estimate from Chase, it will show you the exact amount you would owe at the time you want to buy it out.

In most scenarios, the gotcha is that you'll have to pay taxes again when you buy out the lease. This can be a large sum of money depending on your state.

So there is a catch!

You are saying you would pay taxes on the entire amount at the start of the lease and then pay taxes again on the pay-off amount if you were to purchase it?

I guess if you put $0 down, you would only pay a portion of the taxes over the period of the lease up until you purchased it?

 

[misterturbo]

So there is a catch!

You are saying you would pay taxes on the entire amount at the start of the lease and then pay taxes again on the pay-off amount if you were to purchase it?

I guess if you put $0 down, you would only pay a portion of the taxes over the period of the lease up until you purchased it?

Yes, in most states you pay the taxes on the full price of the car, then if you buy out you pay taxes on the buy out price. In a lease you don’t own the car so technically it is considered a purchase.

Now in regard to 0 down, that’s not common. Usually for a lease you have to pay the taxes annd registration fees unless the manufacturer does fuzzy math on credits. They usually don’t roll that into a monthly payment.

 

[texasbryan]

Yes, in most states you pay the taxes on the full price of the car, then if you buy out you pay taxes on the buy out price. In a lease you don’t own the car so technically it is considered a purchase.

Now in regard to 0 down, that’s not common. Usually for a lease you have to pay the taxes annd registration fees unless the manufacturer does fuzzy math on credits. They usually don’t roll that into a monthly payment.

So basically, the federal tax credit will cover the upfront taxes (6.25% in Texas) and fees and then you would pay whatever taxes are owed when purchasing the lease later on.

 

[jjswan33]

So basically, the federal tax credit will cover the upfront taxes (6.25% in Texas) and fees and then you would pay whatever taxes are owed when purchasing the lease later on.

No. The federal tax credit goes as a capitalized cost reduction. Basically it reduces your monthly payment by $7500/36 (or 24 months) or ~$208 (313) /month. If you pay off early then it just reduces your total due by any remaining amount.

 

[misterturbo]

No. The federal tax credit goes as a capitalized cost reduction. Basically it reduces your monthly payment by $7500/36 (or 24 months) or ~$208 (313) /month. If you pay off early then it just reduces your total due by any remaining amount.

Yep, the tax credit doesn’t become a down payment. But it does lower the taxes due by lowering the cost of the vehicle.

 

[jjswan33]

Yep, the tax credit doesn’t become a down payment. But it does lower the taxes due by lowering the cost of the vehicle.

That depends on your state. In some states with a lease you have to specifically pay tax on that $7500 vehicle cost reduction at closing.

 

[texasbryan]

No. The federal tax credit goes as a capitalized cost reduction. Basically it reduces your monthly payment by $7500/36 (or 24 months) or ~$208 (313) /month. If you pay off early then it just reduces your total due by any remaining amount.

Yes, it reduces cap cost by roughly the amount paid in taxes and fees. So it's almost a wash. Is that not correct?

 

[jjswan33]

Yes, it reduces cap cost by roughly the amount paid in taxes and fees. So it's almost a wash. Is that not correct?

No doubt. Just clarifying in case people take that to mean they could avoid paying those fees at closing.

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