Why Are Luxury Cars so Cheap When Leased?

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You may be wondering how is it possible that luxury cars are so cheap when leased. This is a phenomenon that might seem too good to be true, but it’s completely legitimate! If you’ve always wanted a luxury car, you may have thought you can never afford it. However, through leasing, the impossible may become possible. Just do some research to find out if the car of your dreams is within your budget. A luxury car is within reach if you choose to lease instead of buying. Yes you will have to give it back at the end of your lease term, but you can also choose to purchase your car at that time for a used car rate.

How Can the Lease Payments Be Taxed?

When you first get a car lease you will definitely pay a sales tax. This is typically paid on the down payment mainly, however, some states require you to pay a tax on the whole value of the car which can be kind of pricey. Don’t forget about the registration fees and other fees. So the payments aren’t necessarily taxed all that much, but there will be taxes in the beginning of your new car lease. That’s part of why it is less expensive on a monthly basis to have a leased car than purchasing one for many people. In some states the tax is spread between the payments so you don’t even notice it at all!

What’s the Difference?

What is the difference between buying and leasing a car? Well, when you lease a car you don’t really own any of the equity of the car. When you’re lease is up you have to return the car to the dealer or you can often choose to buy your car at a used car rate. You will then have to put a down payment again either way - whether you choose to lease again or to buy your car. When you buy you do retain some equity, but you will be stuck with the same car for a lot longer. If you are the kind of person who wants to have a nice looking car all the time, then leasing is the way to go. Plus, with leasing a lot of the care and maintenance is included so you don’t even have to worry about it!

Can I claim tax deductions for my car lease payments?

When you lease a car you can actually deduct quite a bit of the cost from your taxes. This is especially important if you are self employed. You should probably use the standard mileage deduction. This means you don’t have to keep track of every little car expense. You do, however, need to keep track of the mileage you travel. If you use your car for work 50% of the time, you can deduct about 50% of the cost of the lease. You should try to be as accurate as possible in your estimates so that you do not have any problems if the IRS comes calling.

Sales tax in states that are not leasing-friendly

As mentioned, there are a few states that make you pay taxes on the whole sum of the car. These states are Georgia, Illinois, Minnesota, New York, Ohio and Texas. If you live in these states you might think twice about leasing a car. These costs can often be prohibitive because they are so great. However, if you’ve been saving your pennies up, then it will all be OK! This is a big deterrent for leasing in some states and for many, it’s a mystery why the companies would do such a thing.

Which state has the lowest fees and taxes when buying a car?

The cheapest state to own and buy a car overall is Alaska, the Final Frontier. Here it costs just $15 at the time of purchase to get a car. The next cheapest is New Hampshire. Yes, the Live Free or Die state has many features and cheap car ownership is one of them. When you purchase you will just have to pay $25! That’s it. Oregon is a close second with just $77 in fees to purchase a car. So these three are great options if you are considering getting a car and want to purchase it somewhere cheap. Of course it doesn’t really make much sense to get a car and then go somewhere else, because you will just have to pay a new registration fee.

Now that you know more about how to lease a luxury car, you should do some research on your local area to find the right car for you. You can have the car you always wanted if you just try this different way of obtaining it. Now get to searching for your dream car that you can lease instead of buy!