gl996tt

Hi everyone,

Can anyone help me out with a payoff question? I've spoke with MB financial many time but they have no answer for me.

My car is leased.
I want to sell my car to a buyer from Arizona. (In Arizona you don't have to pay for the used car tax.)

Now, MB financial gave me two price quote, the first one in $56K included CA 9.25% tax, the 2nd payoff is without CA tax and is $51K.

Here is the question, MB financial rep. told me in order to get the title from MB benz for your car, you MUST pay for the CA tax. But I asked them what about a buyer is from Arizona, he/she don't have to pay for the used car tax. They have no answer for me. They said if you want to pay it off, you have to pay the payoff amount for the car and plus your city/state tax.

Why a buyer from Arizona need to pay for the CA tax since Arizona don't need to pay for the used car tax?

It was not like this before, I paid off my other MB and BMW no need to collect the tax first. They always sent you the title and you go DMV register yourself and pay for the used car tax.

Thanks for the help!!

my06clk

Well first of all you have to understand that your car still belongs to MB financial because its a lease. Since it's a lease and you have a residual payoff, then that is treated like a full sale so taxes have to be paid to the sell which is MB before the title can be released.
If you Owned the car and sold it you can just sell it for what you want and the buyer pays for the sales taxes in his state.

The question here is why are you so concerned woth the tax? if you paid off your lease and decided tp keep the car, then you would have to pay the tax anyway. because it would be treated as a purchase which it is. Just because you lease the car simpley means that you have rented it for however long. At the end of the day, it needs to be sold.

The main qustion is how did you get some crazy to pay you that much for a used car? Are you talking about the car in your signature? either way its better to finish your lease and give that thing back to the dealer and move on.

There is virtually no way you can make out by selling a car that you are leasing, and nearly imposible to sell a leased car outright for exactly the above reason. Unless of course you found someone who was crazy enough to eat all of your fees and the rest of your lease payments Plus the residual price of the car and taxes.. Are you sure your arizona buyer has thought this out? I don;t think so..

gl996tt

No. The buyer is not paying that much for my car. I need to pay $5K if he wants to purchase my car.

My point is, there is nothing to do with MB fiancial with the tax. Why they need to collect the tax for the DMV? The buyer will not paying for the CA tax.

amdeutsch

I believe that CA has a law that requires one to pay ST if buying a CA titled car; even if the buyer is out of state. They should be able to get a CA ST refund after submitting proof of titleling the car out of state. WAG; doublecheck.

my06clk

Sorry I didn;t get that part.. BUt the same explanation goes on a lease. Once you pay the 5K, you are free. Then the car becomes available to you or a referred buyer. MB then acts like a bank seller to the new buyer.

IF it was a dealer, it would be different as the dealer would just register the car to an out of state buyer and he's done.

A bank on the other hand eliminates the transfer of lien becuase they are the lienholder. They simply make a new loan and since the processing of the new papaerwork HAS to happen with the lien holder they have to pay the taxes in CA. So this has nothing to do with the buyer nor where he lives..

Having a clear title changes all of that again. If you owned the car for example, OR a dealer was receiving the 5K for the Title, then the bank would simply sign over the title, Th dealer would then send the CLEAR Ca. title to the buyer. Once he registers the car in His state, The title would be transferred to an AZ title, and he would then be subjected to applicable state taxes if they apply. In this case there would be none.

I hope this helps.. Like I said eveything is different when you are not dealing with a clear title. I still can't see where this worth the effort for the AZ buyer when there are so many deals out there that would work more to his benefit, but thats another matter..

gl996tt

Thanks for the help!

jd986s

You can also transfer lease to buyer ($300 lease transfer fee) then pay your buyer $5k to take over lease. Your buyer then would have the option to purchase your car immediately or at lease end (much better deal at lease end). You won't have to deal with sales tax at all.

gl996tt

Thanks bro,

Good idea but the lease transfer fee is $595 and it take couple week to get the transaction done. Buyer don't want to wait and who is paying for the transfer fee and is too complicated.

I'm headed to another problem today.

Buyer called MB financial today ask for the pay off amount (which is $56K,
included CA 9.25% tax.) He is willing to pay for the car and the tax too.

Here is the problem.

Once he pay off the car and the tax. MB financial will send the title to me not to him, so we have to go to the DMV do the title transfer and DMV will ask him to pay for the used car tax again. (This is what MB financial rep. told him this morning)

Who is going to pay double tax when you buying a car. I really don't understand now. How can I sell my car if the car is leased?

my06clk

I think you need to carefully read my post to you again.. I was pretty sure I explained that. yep.. just checked i did.

chibenz

No No, All you have to do is just sign and release the title and hand over to him. The person who is buying from you have to go to arizona dmv where he wont have to pay sales tax. Simple is that because i bought out of state car too and all i did just turned in the title to my local dmv and its done..