what is the purpose of the "security deposit"?
05-12-2011, 10:39 PM
#21
Race Director
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If I remember correctly, I did leases with Chase, Chrysler and a bank, possibly B of A. I used Turbo Tax so not exactly sure how the total amount of the deduction was calculated, but it was fairly large deduction.
In a 25 percent tax bracket, a $10,000 deduction puts $2,500 in your pocket. Spread over 12 months, that's $208 a month coming off that car payment.
In a 25 percent tax bracket, a $10,000 deduction puts $2,500 in your pocket. Spread over 12 months, that's $208 a month coming off that car payment.
You can also write off a owned vehicle used for business. I do with my GMC Truck. I don't do itemized with depreciation. It has always been better for me to take the mileage deduction instead.
05-12-2011, 11:29 PM
#22
Race Director
The best way to avoid the security deposit is to NOT lease a Vette.
With the low interest rates available to qualified buyers leasing is a bad idea.
Why would you want to just rent a car? That's exactly what you're doing when you lease.
Make payments for 3 to 5 years and nothing to show for it and the end. Makes no sense.
With the low interest rates available to qualified buyers leasing is a bad idea.
Why would you want to just rent a car? That's exactly what you're doing when you lease.
Make payments for 3 to 5 years and nothing to show for it and the end. Makes no sense.
with both of the above.
05-13-2011, 09:50 AM
#23
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Ok - I don't think Mercedes or Porsche does that. I think BMW does that though. One trick for BMW leases is you can use multiple security deposits (MSD) to reduce the cap cost of the car. However at the end of the lease BMW returns all of the security deposits back to you so you're essentially lowering your cap cost of the BMW for free.
In the case of my vette, I would like to avoid the additional upfront expense of a security deposit. Do you know if it's a popular negotiation technique to get the vette dealer to waive the security deposit?
In the case of my vette, I would like to avoid the additional upfront expense of a security deposit. Do you know if it's a popular negotiation technique to get the vette dealer to waive the security deposit?
Every manufacturer has a little different policy regarding security deposits. I don't sell GM, so I don't know what they do, but of the four brands I do have, none of them are collecting security deposits on all models. BMW, which I do have, has a policy of adding security deposits, but because of the slow car market right now, is waiving deposits at this time. And, when they do collect it, it is waived on future leases as long as you have made payments on time.
Regarding the multiple deposit thing - that actually is a smart strategy right now while interest rates on savings and money markets are so low. BMW (and some other mfrs) allow you to put up multiple security deposits in exchange for money factor reductions. You can put down up to 7X the security deposit in exchange for up to 49 basis points off the lease rate. So you get a lower payment up front, and your money back at lease end.
I actually had a guy come in a few years ago who was getting divorced and was trying to hide money from his soon-to-be ex. The security deposit was about a grand, so he X'd that by 7, gave us the money, got a lower payment and a new car, and then got the money back three years down the road.
05-13-2011, 08:51 PM
#24
Race Director
If you have a legitimate business provable lease (Vette is hard) where can take the tax advantage great. Vette as a write off = "red Flag" prepare for audit.
You can also write off a owned vehicle used for business. I do with my GMC Truck. I don't do itemized with depreciation. It has always been better for me to take the mileage deduction instead.
You can also write off a owned vehicle used for business. I do with my GMC Truck. I don't do itemized with depreciation. It has always been better for me to take the mileage deduction instead.
05-13-2011, 09:48 PM
#25
Is the make and model reported on the Business Expense form that gets turned in along with the 1040? I'm not sure it is. I mean I know it is on the worksheets and everything.
05-13-2011, 10:48 PM
#26
Team Owner
I have leased MANY cars and trucks over the years.
Some have had security deposits, some did not. However, ALL of my leases had some "excess wear and tear" on them. It did not matter if I sent the lease back 100% perfect and showroom clean. They try to always find a way to suck more money from you somehow.
Some have had security deposits, some did not. However, ALL of my leases had some "excess wear and tear" on them. It did not matter if I sent the lease back 100% perfect and showroom clean. They try to always find a way to suck more money from you somehow.
The security deposit is very common. Many times they will waive it if you have leased from the same company before.
By the way, I don't agree with blanket statements that you should not lease. It depends on a lot of circumstances as to whether its the right choice or not. I'm fanatical about running the numbers. It also depends upon how long you keep cars.
