Featured Very few EVs qualify for the federal tax credit as of 2024

Mike, your asking too many of the right questions!!! Just sign on the dotted line and I PROMISE we'll be very genital with the shaft.

Seriously, everyone should be very careful signing a lease document. Whatever reasoning you come up with, thinking your going to save money - Remember that the dealer and lease company is still in business. If either one of them was taking it in the shorts, they wouldn't be in business for very long.. As far as rapidly depreciating cars goes; that's usually built-into the math of the lease agreement - again these companies don't survive by being dumb.
The other piece of that tax incentive rebate everyone is ignoring - If you don't qualify; the IRS will attach that $7500 to the taxes you already owe. Do you think you'd be able to return the car if that happened..

Caveat Emptor

 

Sure someone will set up something where the car goes to a qualifying dealers' inventory in between leasor and leasee if that is required.

That applies to buying the car and signing the credit to the dealer.

The credit has always gone to the lease company. Even under the old law. They may then choose to apply the amount of the credit they get to the lease terms.

 

of all the leases i looked at this summer, i never saw a buyout price at the end

 

We got out of a lease at year 2 where often the person assuming the lease will expect a little bit of cash because people are sometimes anxious to get out of a lease. Ours was not that case so they basically just assumed all of our remaining payments.
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Every closed end lease contract must have the "residual value" printed. In a closed-ended lease the residual value of the car stated in your lease at signing is firm. They can not calculate the monthly payment otherwise. You are paying the difference between the sales price of the car and the residual value.

In closed end lease with the end of the lease buy out option, the residual value is the price you can buy the car. Some lease may not give you the end of lease buy out option, but if that is the case, it also has to be spelled out on the contract.

 

so the leases i looked at on line must have all been open end

 

As far as I know, the open end lease are mostly for business lease for commercial vehicles. It is very rare for consumer auto lease to be an open end.

More likely, what you read was just a promotional verbiage not actual lease contract. If you asked the sales manager to show you the residual value and buy out option and he/she won't produce that information before you sign the contract, then forget the dealer. They are not legit.

 

that was my problem, i was onlly looking at online lease ads. if the buyout is so cheap, why don't they promote it?

 

Consumer laws vary from state to state along with required disclosures and some consumer friendly states actually has a 'cooling-off" period - where your allowed to rescind an automotive purchase contract within 24-72 hours. Usually a fee is involved because you've just converted a new car into a used car.

 

Many lease ads states residual value. But if the residual value is set low, the dealer wins if the lessee just pay higher monthly payment and return the car at the end of lease with equity. They don't want you to buy out.

Here is example of Kia lease ad from Kia website:

Closed-end lease based on new 2024 EV6 (Model #N2342) subject to credit approval, dealer participation, and vehicle availability. Offer shown based on $4,999 due at lease signing including $379 first monthly payment, $3,970 capitalized cost reduction, $650 acquisition fee, plus tax, title, license and registration fees, dealer conveyance fee, processing fee or optional service fee and any emission testing charge. No security deposit required. $7,500 EV Lease Bonus not available for cash. Application of $7,500 Lease Bonus results in a net capitalized cost of $3,970. Offer shown total lease payments are $18,643. Actual payments may vary. Purchase option at lease-end for offer shown of residual value of $27,892.25. Lessee is responsible for insurance, maintenance, repairs, $.20 per mile over 10,000 miles/year, excess wear, and a $400 termination fee*. Lease offer applies to EV6 (MSRP $47,275, includes freight, and excludes taxes, title, license, additional options and retailer charges). Actual prices set by dealer.Must take delivery from retail stock by 3/4/2024. Dealer contribution may vary and could affect actual lease payment. See dealer for warranty and lease details or go to kia.com.

 

here's the tesla lease:

design

and bolt:

1G1FX6S09P4203308

 

I read that Tesla does not give the end of lease buy out option. If that is the case it should be stated in the contract. Even without buy out option, there has to be a clearly stated residual value in the contact.

For Bolt, the national lease program $299/month for 36 months. For Everyone: $6,639 due at signing (after all offers).* For Eligible Current Lessees:$5,139 due at signing (after all offers).**
says the "Option to purchase at lease end for an amount to be determined at lease signing." So buy out option is available.

 

That was my experience too. Numberwise, I was better off buying a new Bolt than leasing, even without getting the federal tax credit.

 

That’s a long way into the process to find out the buyout cost, I would never do that.

 

Besides, Chevy has no mentioning of lease deal getting the credit cash. Tesla does but shows no numbers. In either cases, state incentives likely not eligible for a leased vehicle. So for Tesla and Bolt, purchase is better deals. For Toyota, Hyundai, and Kia, lease-to-buy may be the best way. But, with complex leasing contract, buyers have to be very keen on reading all small prints and checking the numbers before signing.

What I usually do is to ask for a blank lease contract before even visiting the dealership to study the documents and familiarize my self to be able to spot the key elements of the contract at the closing. Some dealers don't go along with such request. If they don't, I just go to another dealer.

 

I understand that; I speaking about a person signing the lease contract that doesn't qualify for the incentive.
EV Tax Credit 2023: Do You Qualify for the $7,500 Tax Break? - CNET
I'm sure the lessee will be signing an indemnification form, in-case they don't qualify for the $7500 credit that was fronted to them to drive it off the lot with nothing down.
In the three times I've bought a new car, I've always caught the finance guy making "an honest mistake", that benefited the dealership - NEVER me. I've seen them forget to include my trade credit, add-ons I didn't approve of or was stated that they would give it to me for free, interest-only payments for the first half of the loan contract - you don't start knocking down the principal you owe until you breach the middle of the loan contract. The loan companies love those. If you pay-off your loan early - they get to keep everything you contracted to pay - you don't get a discount for early payment, because you paid for borrowing the money first - same with a refinance. You need to ask for a "simple interest" loan contract. Rather than deal with that BS - I work-out the numbers in advance and pay cash. I'm usually within $50; which turns out to be some documentation fee they try to hang-on. I've actually walked out of a dealership over that. Dealership called me the next day, saying they will do the deal and wave the fee. I declined, because they broke my first rule, get me out the door in an hour - "You've already wasted 1.5 hours of my life, not going to let you waste any more of my time".

 

For leasing EV with $7500 lease cash by manufacturer, lessee does not have to qualify for the tax credit eligibility. Only the purchasing consumer should be aware of the eligibility issue.

 

Sounds like the lie-er loans that brought down the housing market around 2008. Who's responsible and who's left holding the bag? If the proper IRS forms are filled out, and you don't qualify - I'm pretty sure your looking at an additional $7500 in federal taxes. I'm sure neither the dealer or lease company is going to "eat" that one.... sounds like a win-win and windfall for dealerships, since they get to sell the car a second time and play the same game again, only with $4000 used EV credit.

I wonder if the automotive dealership lobbying group had anything to do with this?

 

It is a loophole in the new IRA implementation. For a leased vehicle, lessee (consumer) does not own the car. IRS has no credit for the lessee. Only the lease company holding the title to the vehicle is eligible for the credit. And since it is not consumer purchased vehicle, the car does not have to meet the North American built requirement.

That is why Toyota, Hyundai, and Kia are enticing lease deals with a $7500 lease cash offers.

 

Such cynicism!
The tax credit is transferred from the purchaser to the dealer/leasing agency.
If the dealer doesn’t have the tax liability the dealer has far bigger issues to worry about.