CREATING FINANCIAL FLEXIBILITY ONE DEALER AT A TIME
What Are the Sales Tax Advantages of Operating in a Pay-A-You-Go State
Eyo Toe | June 3, 2021
Pay-as-you-go sales tax is one of the major value adds of having a leasing program when you are located in a pay-as-you-go state. Typically, when using a Retail Installment Sales Contract (RISC) the dealer pays all of the sales tax up front, before the consumer has made any payments. Oftentimes, most if not all of the down payment will be allocated towards the upfront sales tax causing the dealer to be cash negative at the inception of the deal.
LHPH dealers* are able to pay sales tax with each payment the customer makes, allowing them to keep the entire down payment up front. This will create a positive cash flow up front especially when thinking about the impact of multiples leases per month.
Check out this map to find out if you operate in a pay-as-you-go state.