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Re: Gen2 Lease Question

Hi,

Two weeks ago, I leased a 2016 Volt, and completely love the car. During the sales presentation, the dealer repeatedly mentioned the $7,500 Federal tax credit as a key incentive (on top of the State of CA rebate, HOV stickers, Costco deal, etc.), and said I'm entitled to it. So, I forked over my down payment, signed the lease, and drove home.

Yesterday, I looked up IRS guidance on the Federal tax credit, and it says that when it's a lease, it's the leasing company -- not the driver -- who is allowed to make a claim. Further research, and a call to another Chevy dealer, seemed to confirm that for lease sales, the $7,500 is typically taken off the price, so the consumer gets the benefit.

I then looked at my lease, and can't see the credit reflected anywhere on it. It shows about $4,400 in "rebates and incentives", which is added to my own down payment as a combined price reduction total. But that's it.

The lease is with GM Financial, and their rep couldn't say for sure the company will claim the credit -- but he believes so, and will call me back with more info. He also said that if GM Financial does claim the credit, and the dealer hasn't credited me with an equal amount, the only recourse is for the dealer to pay off the current lease, then open a new one with the corrected figures -- and it's their call on whether they want to do that or not.

My question is whether anyone else has found themselves in a similar situation, or has any insight on the problem. It could be that I'm just missing the credit on the lease, but I don't believe so. And yes, I know that I'm an idiot for not verifying it with the finance person before I signed the lease. It's no excuse, but was so excited about getting the car that I just trusted them in that moment. Stupid me.

Any help or advice would be appreciated. Don't want to go down a legal route on this, but would if all else fails, and there is a clear case of misrepresentation, fraud, or other facts that would make the contract invalid.

Many thanks.
 

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Well, when I leased my Leaf it was a little confusing how they did it. There's a lease agreement a couple feet long where they take the $7500 off the MSRP of the car, then your down payment, other incentives, etc. That is why they were (at the time) able to offer Leaf leases for $200/mo. Then there is the residual amount that's based on what they think the car will be worth at lease end. Subtract that from the adjusted MSRP, divide by your number of lease payments, and that should approximate your monthly lease. Confusing as mud, eh?
 

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The financing company that buys the new car from the automaker gets the full tax credit, so it can pass those savings to the you in the form of lower monthly payments. On your paperwork, you should see a line for a capitol cost reduction. That is the tax credit.
 

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I then looked at my lease, and can't see the credit reflected anywhere on it.
As you probably know, this is called "Buyer Beware". A sales person can SAY ANYTHING they want to entice you to purchase. It's UP TO YOU to validate anything they tell you. Don't SIGN ANYTHING unless you understand it completely. Frankly, you have no legal recourse at this point.

For Volt leases in general though, the tax credit factored into the residual value (i.e. the residual is $7500 higher than it would otherwise be). You would have to provide all the details of your lease in order to evaluate this. It's very likely that the credit is taken into account.

(Wait until ilninja jumps in and tells you how foolish you are for leasing at all)
 

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I still don’t know exactly why you didn't get the full $,7,500. May be they are pocketing the $3,100. since the link on your contract is already dry, i doubt there is anything you could do at this point.
 

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Discussion Starter #6
Hi,

Thanks for the quick replies - and yeah, I'll take the criticism due. My lease shows a capitalized cost reduction of $5327.29 under "Amount due at lease signing", along with $505.14 in taxes of capitalized cost reduction and a few other line items.

Next to this section, it lists how that amount will be paid. $4475 is listed in rebates and non cash credits, and the balance is my cash down payment.

As for residual, it's listed at $22123.

Does any of this indicate a federal tax credit reimbursement, if only in part?
 

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I think that Volterado has it right. The tax credit is passed on to you by artificially raising the residual value of your Volt. This has the effect of lowering your monthly lease payment. I'm not sure that the leasing company has any obligation to pass the full credit on to you. So your residual is probably artificially high, but maybe not by $7500.00. One downside of this accounting gimmick is that it won't be a good deal should you decide to purchase your Volt at the end of the lease.
 

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These comments are not correct. GM splits the 7500 credit like this - 4475 is given up front as a cap cost reduction, the remaining 3025 is built into the residual value of 54% on a three year 12k lease. Otherwise this percentage would be lower to account for the untested resale marketplace for used battery equipped vehicles. There is a money factor (interest rate) of .96% for top tier credit. Use lease guide.com to add your figures. In addition to this there is a 595 lease fee and a freely available 1,000 private offer discount. On my loaded ltz this came out to around 375/mo


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These comments are not correct. GM splits the 7500 credit like this - 4475 is given up front as a cap cost reduction, the remaining 3025 is built into the residual value of 54% on a three year 12k lease. Otherwise this percentage would be lower to account for the untested resale marketplace for used battery equipped vehicles. There is a money factor (interest rate) of .96% for top tier credit. Use lease guide.com to add your figures. In addition to this there is a 595 lease fee and a freely available 1,000 private offer discount. On my loaded ltz this came out to around 375/mo


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Exactly. This is my understanding and the same numbers I received.
 

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Discussion Starter #10
That's extremely helpful, thanks. I'll verify with the dealer, but the split you described seems to be present in my lease. What surprises me is that both GM Financial reps I spoke to had no clue about how the tax credit is applied within the lease. They made me feel like I'm first person to ever ask them. I know they don't take any responsibility for what happens at a dealer level, but you'd think they would at least know the basics.
 

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That's extremely helpful, thanks. I'll verify with the dealer, but the split you described seems to be present in my lease. What surprises me is that both GM Financial reps I spoke to had no clue about how the tax credit is applied within the lease. They made me feel like I'm first person to ever ask them. I know they don't take any responsibility for what happens at a dealer level, but you'd think they would at least know the basics.
I had the same experience and could not agree more. It's not that complicated especially when it's part of your job.


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Raechris,

Can you please provide the details of your lease? I am paying about $411/mo on a loaded Premier with the Safety 1 package. 4 yrs, 12,000 miles / year. Residual of $18,900. I am a Costco customer and was supposed to get a pre-negotiated price. I've been kinda lazy is seeing if I got a fair deal. No problem if you'd rather not. Regardless, I am happy with my dealer experience.
 
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