The new Illinois law pertaining to auto leasing took effect January 1, 2015. State taxes on vehicle leases have been reduced by as much as 50 percent. This will allow consumers to lease more car for less money. The House Bill (2317) was signed by now Governor Pat Quinn in May of 2014 and alters the way taxes are collected on light-vehicle leases.
Before January 1, consumers paid tax on the entire purchase price of a vehicle. Now, customers who lease a vehicle pay taxes only on the money due at the start of the lease and monthly lease payments. Most vehicles have a residual value of 50 percent or more; the new law will reduce these taxes.
Nationally, the number of new-vehicle owners has grown 26 percent; doubling over the last five years. Illinois has lagged behind this figure, at just 14 percent. The leasing rates in the Chicagoland market are the lowest for any metro market in the country. For instance, leasing rates in New York are at 50 percent and 48 percent in Cleveland.
Auto dealers are hoping the new vehicle lease law will make leasing much more attractive to Illinois consumers. It is widely believed that only luxury cars are leased, when in fact, according to Experian Information Solutions, each of the top 10 lease vehicles starts at a MSRP of below $25,000.
Monthly payments may also be lowered by $100 or more for leases. The Illinois new-car dealers accounted for $28.4 billion in total retail sales in 2013; 15 percent of the stateâ€™s total. The Chicago Automobile Dealers Association (CATA) recently released million-dollar educational campaign branded â€œThe Lease You Can Do: More Car, Less Money.â€ The print, broadcast, online effort is designed to help Chicagoland buyers understand why vehicle leasing makes financial sense.
*CATA website, January 2015