Are car leases negotiable and tax deductible?
This year the number of Americans leasing new cars has reached an all-time high, and for good reason! Not only are the monthly lease payments often lower than the monthly cost to pay off a purchased vehicle, there are also a variety of great lease specials to take advantage of. Maybe you’re interested in the sporty, sophisticated 2014 Nissan Maxima but couldn’t find a lease special you liked on the Matt Castrucci Nissan website. Are car leases negotiable and tax deductible?
The answer is “yes!” to both questions. To start, only businesses can deduct monthly leasing payments as an expense, but individuals also see a form of a tax break. In most states drivers who lease only pay tax on the monthly payments and not the full price you would have paid if you bought the vehicle. That means lower taxes overall for most lessees.
Now let’s dive into what is and isn’t negotiable on an auto lease. What is negotiable is the capitalized cost of the new vehicle, trade in value of your current vehicle and money factor. So not only can you negotiate on the selling price of the vehicle you are interested in as if you were buying it, but you also can negotiate how much you think your trade in is worth. Also negotiable in the money factor, or the interest rate on the lease. This is based on your credit score, but it never hurts to ask if this rate can be negotiated.
So what can’t be negotiated? There’s no way to get out of the residual value or what the vehicle will be worth when the lease term is over. This value takes into consideration the depreciation of the value of a new car, which decreases significantly once it leaves the lot. The other item that can’t be negotiated is the acquisition fee or administration fee. Sometimes it can be put into the monthly payment or paid up-front, but it won’t disappear all together.
Please note that each case is very different. Just because something is listed here doesn’t mean it will automatically apply in every situation. At Matt Castrucci Nissan we work very hard to help our customers find the best financing and lease agreement that is right for them. Our team will work one-on-one with you to find great solutions and help you choose the vehicle of your dreams. To get the conversation started, contact us today by calling 855-299-1946.