In some states, like Pa, one pays only the sales tax on the
amount of each monthly lease payment, as it comes due. In Pa it
is 9%, as opposed to the normally 6% sales tax rate that one
would pay on the full or trade price if they purchased the
vehicle. They get by the Pa flat tax provision of the
Constitution by calling it a 'use' tax under the states 'Sales
and Use Tax' law.



mike hunt



Gorton McGrew wrote:
>
> On 2 Sep 2003 20:05:37 -0700, roadieroger@earthlink.net (Roadie Roger)
> wrote:
>
> >MelvinGibson@mailcity.com wrote in message news:<3F5518E0.E639749D@mailcity.com>...
> >> One would be well advise to negotiate the purchase price, then
> >> mention your trade if you have one, then determine which is the
> >> best method that will enable your budget to provide for you to
> >> acquire or use that vehicle.
> >>
> >> mike hunt
> >This is excellent advice!
> >
> >The monthly lease payment is derived from the Principle
> >(Capitalization Amount), Interest Rate (money factor), Term in Months
> >and Residual.
> >
> >The dealer makes more money with a higher Principle, higher Interest
> >Rate, longer Term or lower Residual. You can mathemaically lower the
> >monthly payment with a longer term. This is the most common scam when
> >the dealer "works with you to get you the payment you need".
> >
> >Most dealers won't even admit there is an Interest Rate. You have to
> >trust them that they are giving you a fair deal. Trusting a dealer is
> >their highest profit item.
> >
> >You are paying Interest on the full financed value of the car for the
> >time you lease it. The statement that "you only pay for the part of
> >the car you use" has to be taken with a grain of salt.
> >
> >Happy Leasing,
> >Roadie Roger
>
> You also pay sales tax on the full amount. That is true if you
> purchase as well, but leasing limits the length of time you will have
> the car thus ensuring another tax payment in three years (or
> whatever.) If you decide you want to purchase the vehicle at lease
> end, you will have to pay sales tax again on the same vehicle. At
> least that is the way it works in Illinois.