GM Volt Forum banner

Super confused about the $7500 and leases!

5460 Views 15 Replies 9 Participants Last post by  eric_n_dfw
How is the $7,500 tax credit used by the leasing companies such as US Bank and Ally?

From the Chevy national deal and and other posts here I understand that the savings are passed down to the leasee, but the math doesn't make sense to me.

For the example below I'm not considering any fees, taxes, etc just the basic numbers.
Approx $35,000 base price X 58% residual value = $20,300

If the car costs $35,000, and you subtract out the $7500, you are left with $27,000.

Keyes and Rydell are offering $5000 off invoice, so that comes to $22,000.

Cap $22,000 - Residual $20,3000 = $1700

$1700/36 = $47 a month.

Now I know a brand new car is not going to lease for $47 a month, but what am I misunderstanding here to get to that number?

Some other poster said it is the leasing companies money and not mine so I shouldn't have to worry about it, but then why advertise that the savings are being passed on?

For a real world example, I got a quote for a US Bank backed lease. The dealer had put the residual at 37% for a value of $12,948 and then added in the $7,500 to get to $20,448 which is 58% and some change.

From other websites the residual for the 2014 Volt is around 58% BUT that doesn't include the $7500 tax credit.

Where is the supposed $7500 savings in the US Bank lease?

Ally does something similar as well to come with a ~20K residual.

What am I getting wrong here!?
See less See more
1 - 2 of 16 Posts
^^ that's correct, except it's not a trap unless you get tricked. Any 55-62% "residual rate" applied is an adjusted rate to include the $7500 tax credit. Here's another discussion thread (with a chart), before the sticker was lowered:

Excellent chart, so basically at each arrow, there is an opportunity for the dealer and the bank to pad a little and make money without you knowing it as you are looking for that "low" payment.
Thank you, and yes that's correct- dealers often do make extra $ from people not understanding the lease. That's why it's important to know the numbers before signing. I've never bought or leased a car without having worked out the amounts before delivery. My lease with Keyes was the first time I ever accepted a car and the bottom line number on the paperwork was perfect on the first go. My lease was exactly as promised, to the penny, no last minute switcheroo.

There are many advantages to leasing. For me it was about not trusting the long-term reliability of the car. I now know that my Volt is a solid, reliable car and will consider buying it out at the end simply because I know I have a good one.
1 - 2 of 16 Posts
This is an older thread, you may not receive a response, and could be reviving an old thread. Please consider creating a new thread.