New Illinois Leasing Law

We know that any vehicle purchase can be stressful not only to your pocketbook, but to you as well. Well all that has changed in the state of Illinois. On January 1, 2015, leasing a vehicle in Illinois became quite a bit more attractive (by 50%, if you look at the numbers). The new Illinois Leasing Law reduces the amount of tax that a customer would pay while leasing a car.

Prior to 2015, a customer would pay tax on the purchase price of the car, even though a lease acts as a long-term rental. This made leasing a car unappealing. Nationally the lease rate is right around 26%, but in Illinois it has been only 14%. Chicago is even lower than that, at only 8% of all vehicle sales being leases. New York, for example, has a nearly 50% lease rate. The new law states that a customer only has to pay taxes on the down payment and subsequent monthly payments.

The Illinois sales tax rate varies by area- we went with 8.25%, the rate in Cook County, which contains Chicago. Chicago rates are actually higher at 9.5%. Here is an example to show you what the difference would be like from 2014 to 2015 for a 36-month lease:

 

2014 Lease- $30,000 purchase price* with monthly payments of $300	2015 Lease- $30,000 purchase price* with monthly payments of $300
$0 down payment	$0 down payment
Customer pays $2,475 in taxes total	Customer pays tax on down payment and sales tax on each monthly payment which totals roughly $1,056
Customer can pay tax up front or in monthly payments	Customer pays tax up front on down payment and tax each monthly payment making total $324.75
Total taxes- $2,475	Total taxes- $1,056

 

Here the customer saves roughly $1,400 on their bill. It saves even more for a 24-month lease term:

 

2014 Lease- $30,000 purchase price* with monthly payments of $300	2015 Lease- $30,000 purchase price* with monthly payments of $300
$0 down payment	$0 down payment
Customer pays $2,475 in taxes total	Customer pays tax on down payment and sales tax on each monthly payment which totals roughly $594
Customer can pay tax up front or in monthly payments	Customer pays tax up front on down payment and tax each monthly payment making total $324.75
Total taxes- $2,475	Total taxes- $594

 

Here the customer saves almost $1,900 dollars on taxes.

The new leasing law makes leasing a car in Illinois like most other states. One change that also came into effect is trade-ins no longer influence the amount of taxes on a lease vehicle. Previously, a lease would reduce the value of the purchase price of the vehicle, thus reducing taxes.

Texas is the only remaining state where leasing is based upon the purchase price of the vehicle. Stop by Coronet Chrysler Dodge Jeep Ram Fiat and see what we can do to get you into a lease!