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New Illinois Leasing Law

Mitsubishi has been moving up in the world, and so are you if you would like to lease a new Mitsubishi Outlander, Outlander Sport, Lancer, or Mirage. Coronet Mitsubishi features a great selection of these new cars, and now the wonderful state of Illinois is granting you the opportunity to lease one at a better rate than ever before. If you reside in or near Chicago, don’t hesitate to drive over to Coronet Mitsubishi in Peru, IL. Our finance department is ready and standing by if you have any questions or are interested in auto leasing.
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
$0 down payment

Customer pays $2,475 in taxes total

Customer can pay tax up front or in monthly payments

Total taxes- $2,475
2015 Lease:
$30,000 purchase price with monthly payments of $300
$0 down payment

Customer pays tax on down payment and sales tax on each monthly payment which totals roughly $1,056

Customer pays tax up front on down payment and tax each monthly payment making total $324.75

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
$0 down payment

Customer pays $2,475 in taxes total

Customer can pay tax up front or in monthly payments

Total taxes- $2,475
2015 Lease:
$30,000 purchase price with monthly payments of $300
$0 down payment

Customer pays tax on down payment and sales tax on each monthly payment which totals roughly $594

Customer pays tax up front on down payment and tax each monthly payment making total $324.75

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.
- + Disclaimers