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Federal rebate *subtracted* from residual??

3K views 8 replies 6 participants last post by  DonC 
#1 ·
I have been studying up on how the federal rebate is applied to a Volt lease and thought I had it figured out:

The $7500 rebate would be taken by the leasing company (owner of the car) and either 1) used to reduce the cap cost or 2) used to raise the residual. In either case, this will reduce the difference between the two, which is the depreciation cost that I will pay over the term of the lease. Net result is lower payments for me.

My dealer is telling me the rebate has been *subtracted* from the residual to leave a lower buy-out cost at the end of the lease term. I am confused.

Here are the numbers they have given me:

2015 Volt loaded (premium trim, safety 1 and 2, nav and bose)

MSRP 39,310
Dealer discount 700
Lease cash 3700
"Other incentives" 2000
Acquisition fee 595
Net selling price 38610
Net cap 33505
Down payment 0
Residual 18869 (48%)
They are stalling on giving me the money factor, but...

Lease term 36 months
Monthly payment w/o tax 445.84, so I could calculate it out, I think.

So, this seemed awfully high compared to other good deals I have seen on this site, so I asked how the federal rebate would be applied to these numbers - would it be used to bring down the cap or raise the residual. I was told that it already was used to *reduce* the residual (which was 24K before the adjustment???).

Please help me understand! All the residuals I have seen on this site have been around 50% and it did not look like they were adjusted by rebate amount.

BTW, today they offered me $35,500 "out the door cash price" if I wanted to buy instead of lease. From this I could take the $7500 at tax time, leaving net $26,500 (then possible trade-in of my beloved old Civic of $6K to get to $20,500 in the end).

So, I clearly am not going to take the lease deal as presented, as it seems pretty poor.

Thanks for any help on understanding why they are treating the rebate as they claim in the lease deal.

-jc
 
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#3 ·
JC,

Leases can be very simply, or very complicated, and often the buyer simply can not make sense of it (as mentioned in your post) therefor hard to know if you are actually getting a good deal or not.
Your numbers seem very high /month +tax.
Taxing on lease also varies between states.
Some states tax your actual monthly payment, other states like mine (Texas) taxing the full and entire value of the vehicle upfront - before federal credits-and rolling it into the lease or monthly payment. They wanted to take full MSRP (minus some dealer discount), add 6.25% tax, then start working the lease numbers.

When I was on the market for a new Volt, GM's advertisement of $268/month with $2500 down drew me in, but after getting actual quotes form 3 different dealers, my monthly payment would have been over $500 (more like $550/month) and that is the standard 36mo- 12Kmiles/year lease.
It was very hard to know where the rebates went (not to me), where did the discounts go and even my trade- in (positive cash) seemed to have disappeared in the lease numbers.

Some here on this forum got $2xx /month lease with $0 down, I think I have seen one that was even lower than $200. I do not remember the exact details.

During my quest to get a good lease, sitting down with salesman, often it was difficult for them to answers some of my $$ questions. The salesman him self had to run back and forth for answers to the lease managers. Even then answers were cloudy.
I got fully discouraged of even attempting to lease in Texas.

I hope others here will have a better answer, I just wanted to share mine.

In Texas - rebate goes to the leasing company- the leasee does not see a penny form it.
 
#4 ·
Thanks, Even-Steven. Helps me understand that I am not going crazy! Sounds like leases can be difficult to sort out. I have never leased before - always bought and driven for 7-10 years.

Volt just too tempting right now, Civic at 8 yrs but only 61K miles. But my 20-mi round trip commute would mean all electric all the time.

Did you end up buying instead of leasing?

I also am looking at buying one of the many 2012s that I see for sale - there are many with about 29k miles, presumably coming off lease.

Any word on how the older Volts are holding up?
 
#7 ·
I

That lease sounds insane. If you are a buy and hold type of person, why start leasing now? it's smart of you to ask all these questions, and the fact they won't give you easy answers to your questions means you should run away. They are fleecing you.
 
#6 · (Edited)
You are correct in your understanding. The tax credit used to be added to the residual but leases now are subtracting it from the cap cost. Has to be one of these alternatives. Having it decrease the residual would be insane since that would increase your payments! The lessor would get the tax credit and you'd get to pay the lessor more. Nice double dipping if you can get it.

Also no idea why they won't give you the money factor. There IS a national lease offer! Try a different dealer.
 
#8 ·
Thanks for all your replies! The reason I was looking at leases is that I have imagined turning in a 2015 in three years for something more advanced. I don't mind paying a little more for that convenience of switching easily. But if the lease options here in KC are so much worse than buying, then I'll either take the plunge and buy new or find a deal on a used 2012-2014.

Looking at used prices, they seem to be holding value pretty well (considering the "pre-depreciation" offered on a new one by the federal rebate). Makes new look like a smart move when I can get one for not much more than a 1-2 year old low-mile car.
 
#9 ·
You might want to check out this new thread. http://gm-volt.com/forum/showthread...e-signed.-Thanks-forum.&p=2633970#post2633970 The OP there got a great price and lists all the relevant info (and yes the tax credit was subtracted from the cap cost). Not saying you can get the same price, it's quite possible you can't in your area, but it at least gives you an idea of what is possible and how the numbers are crunched.
 
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