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How to Calculate Monthly Lease Payments

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  • delta737hdelta737h Posts: 603
    stevied32,

    Need more details. I have no idea what base cap cost means as it is not a term defined in the FRBB's Reg M. I would ask the dealer for their lease worksheet. It will tell you everything you need to know and then some.

    Here's what is missing...

    Selling Price
    Amounts capitalized in the lease
    Gross Cap Cost
    Taxable and Non-Taxable Cap Reductions
    Adjusted Cap

    If you can provide this information, I can compute your lease payment to the penny.

    NJ computes sales tax based on the total of the taxable payments just like in Ohio.

    J. Clark
    TheAutoLeaseGeek
  • The worksheet they gave me is useless as it doesn't list the items as you requested above. I will try to answer your questions the best I can.

    Selling Price is $47564 (they told me they reduced the MSRP to this amount)
    GM is offering $4000 in rebates ( I think this is referred to as Cap Adjustment)So this also needs to be factored into the final selling price.
    I don't know how to answer the taxable and non-taxable cap reductions, sorry
    All the following fees are to rolled into the monthly payments:

    Bank Fee $595
    Window Etch $239
    Tire Fee 7.50
    Title $401
    Doc Fee $279

    That's all the info I have so hopefully you can calculate it from this info and the other info in the previous post.
  • ok, I received the worksheet from the dealer and now they found an even lower money factor. here is the info.

    MSRP 48795
    Base Residual Value 27813

    CAPITALIZED COST-
    Agreed Upon Value (Base Cap Cost) 47564
    Upfront Sales Tax/Tax on Cash Cap Cost Reduction 1575
    Acq Fee 595
    Other 239
    Gross Cap Cost 49974
    Rebates (cap cost reduction) 2762
    Adjusted Cap Cost 47211

    Monthly payment $540 and that should include tax

    It appears that they are now not giving me the full $4000 GM rebate. These guys are driving me nuts.
  • delta737hdelta737h Posts: 603
    edited January 2013
    When I see this...

    "Upfront Sales Tax/Tax on Cash Cap Cost Reduction 1575"

    I become very confused :confuse: Upfront Sales Tax??? Upfront means that it's paid at lease signing. Yet, you show that the "Upfront" Sales tax and tax on the cash cap cost reduction ($1575) is capitalized in the lease as the gross cap is $49,973. I assume you mean that the tax is paid to NJ "upfront" but is capped in the lease. It might be helpful if you could itemize what you're paying upfront.

    You also stated...

    "I received the worksheet from the dealer and now they found an even lower money factor."

    Is that lower than the 0.00077 that you stated previously If so, what's the new lower money factor? 0.00075?

    Here's what I get given the information you provided...

    MSRP 48795.00
    agreed upon value or sell price 47564.00
    total NJ state sales tax (7.00%) 1578.10
    acq fee 595.00
    Other 239.00
    gross cap 49976.10
    cap reduction 2762.00
    adj.cap 47214.10
    residual (57% x MSRP) 27813.15
    money factor 0.00077
    term 39
    payment including tax 555.23

    Can't imagine how they get a payment of $520 including tax. Something just doesn't seem right. Honestly, the only way I can help you would be if you emailed me your dealer's lease worksheet. Otherwise, I'm guessing.

    John
  • delta737hdelta737h Posts: 603
    edited January 2013
    It just occurred to me that you're leasing a GMC Acadia Denali. If you're using Ally Bank as the fund provider, you should have been quoted an interest rate and not a money factor as Ally Bank does not use a money factor. I beieve the current rate is 1.85%. And, unless it has changed, Ally's acq fee is $795. That may be part of the problem.

    John
    TheAutoLeaseGeek
  • I'm a little confused regarding taxes on leases:

    Do we pay tax upfront or as part of the monthly lease payment?

    I'm in NJ where tax is (i think) paid on total monthly payment but the local acura dealership quoted me a price w/ tax and inception fees upfront.

    Also- does the lessee pay the bank fees?
  • qbrozenqbrozen Posts: 16,897
    in NJ, tax is on the payment.
    And, yes, you pay bank fee (also called acquisition fee).

    You CAN pay tax up front... but I can't see the point. It doesn't save you any money since interest is not charged on the tax.

    '13 Stang GT; '86 Benz 300E; '98 Volvo S70; '12 Leaf; '08 Town&Country

  • Like Ohio, NJ tax is computed on the sum of the taxable payments. The tax can either be paid upfront by the lessee or the tax can be capitalized in the lease wherein interest is levied on the tax as it would be a part of the adjusted capitalized cost. If your cost of money is low compared with savings rates, it's best to capitalize the tax from a financial perspective.

    J. Clark
    TheAutoLeaseGeek
  • qbrozenqbrozen Posts: 16,897
    edited February 2013
    Are you certain?

    Because any lease I've done, I can figure out the base payment and then simply add 7% on top. If total use tax were calculated, then added to the payment prior to adding the interest, wouldn't that give me a very different net payment?

    EDIT: Found this resource that tells me the tax is not charged interest: http://www.leasetips.com/salestax.htm

    '13 Stang GT; '86 Benz 300E; '98 Volvo S70; '12 Leaf; '08 Town&Country

  • delta737hdelta737h Posts: 603
    edited February 2013
    I'm positive. Most States compute the tax on the payment streams for which tax is payable as payments are received. However, some States like Ohio and NJ compute tax on the sum of the taxable payments. A taxable payment is computed and that, in turn, is multiplied by the lease term (months). This is the tax base upon which the tax rate is levied. NY does something similar. I've written some articles about this on my website. You may want to look at the following article...

    https://autoleasegeek.com/457/457

    Questions? Please let me know.

    John

    I'm not sure what you mean by net payment. The sum of the taxable payments is used only for purposes of establishing the tax base and levying the tax. The actual tax can be capped in the lease. Naturally, the taxable payment will be different than the regular lease payment if tax is capped.
  • qbrozenqbrozen Posts: 16,897
    edited February 2013
    however, is it true that interest is not charged on the tax? So, in effect, it is the same as paying tax on the payment (even if calculated differently, if the end result is the same, it doesn't matter). As long as interest isn't charged on the tax, there is no benefit paying it up front, which was the poster's question. Correct?

    '13 Stang GT; '86 Benz 300E; '98 Volvo S70; '12 Leaf; '08 Town&Country

  • delta737hdelta737h Posts: 603
    edited February 2013
    If the tax is capitalized, then it will be subject to interest charges as it is included in the gross cap. Below is a lease I constructed almost two years ago in Ohio...

    April 11, 2010

    2010 Honda Accord LX

    Retail Pricing Information

    Base MSRP 2010Honda Accord LX AutomaticModel CP2F3AEW………..….…………… 21,855.00
    Polished Metallic ……………………………………..….………………………………… 0.00
    Destination Charge…………………………………………………………….…………….….. 710.00
    MSRP……………………………………………………………………..…………….…...…… 22,565.00

    Selling Price
    Agreed Upon Value……………………………………………………………………….……… 18,884.05

    Amounts Financed (Capitalized)
    AHFC Acquisition Fee…………………………………………………………………………… 595.00
    Medina Sales Tax @ 6.50%  36  206.93………………………………..…………………….. 484.22

    Capitalized Costs
    Gross Capitalized Cost………………………………………………………………….……… 19,963.27
    Capitalized Cost Reduction……………………………………………………………………. 0.00
    Adjusted Capitalized Cost……………………………………………………………………… 19,963.27

    Residual Data
    Residual Factor………………………………………………..…………………….…………. 0.60
    Residual Value (Residual Factor × MSRP)………………………..……………….…….….… 13,539.00

    Cost of Money/Term
    Money Factor…………………………………………….……………………….……….…… 0.00127
    Term (months)……………………………………………………………………….………… 36

    Lease Payment Itemization
    Monthly Lease Payment…………………….…………………..……….…………….…….… 221.00
    Taxable Monthly Lease Payment……………………………………………………..……….. 206.93

    Estimated Charges Payable at Lease Origination
    License, Title, Registration Fees (estimated)……………….……….…………………...…….. 125.00
    Amount Due at Lease Signing…………………………………………………………..…..… 125.00

    Fund Provider: AHFC
    GAP Coverage: Included
    Annual Mileage Allowance: 12k
    Disposition Fee: None
    Excess Mileage Charge: $0.15 per mile
  • delta737hdelta737h Posts: 603
    edited February 2013
    This goofy line...

    Medina Sales Tax 6.50%  36  206.93………………………………..…………………….. 484.22

    from the above post should read...

    Medina Sales Tax 6.50% x 36 x 206.93..... 484.22

    John

    PS: Anything that is capitalized in a lease, taxes or otherwise, is going to be charged interest.
  • thngpg3388thngpg3388 Posts: 4
    edited February 2013
    Thanks for all the info. A little over my head.

    So paying upfront and paying monthly is essentially the same?

    Only asking because I have 2 lease offers: 1 w/ all fees/taxes rolled into monthly payments and the other with much higher upfront costs including tax w/ lower monthly.

    the higher upfront cost sounds cheaper in the long run but maybe i'm missing some additional fees.
  • Given that a car is a depreciating asset and the cost of money is relatively cheap, I wouldn't part with any money upfront. Just roll it in with the lease.

    John
  • Thanks for the advice!
  • qbrozenqbrozen Posts: 16,897
    I don't believe the tax is capitalized in NJ. At least, I can't find any evidence that supports that.

    So that OH lease you pasted, I can see that, if interest wasn't charged on the tax, the payment would be about 60 cents less. AFAIK, if you did that same lease in NJ, the payment would be $220.38.

    Maybe I'll see if my sister can bring over her lease contracts we did a few weeks ago so I can take a look.

    '13 Stang GT; '86 Benz 300E; '98 Volvo S70; '12 Leaf; '08 Town&Country

  • Tax can be capitalized at the lessee's request. I have constructed several lease proposals for individuals in the State of NJ over the past three (3) years and have never had a problem with any of the NJ dealerships doing this. They really don't care and neither does the State of NJ. Either way, NJ will receive the tax payment upfront. The fund provider simply advances the dealer the cash to pay the taxes and the lessee re-pays the tax, included in their lease payment, over the term of the lease.

    If you have any questions about the lease contract, please let me know.
    I'll be glad to address them.

    John
  • I received an offer from a Volkswagen dealer on a 2013 CC

    MSRP 32890

    Sell price 29576

    Money factor.00010

    Payment of $479/month with $1000 down + fees.

    Is this a good deal?? :confuse:
  • qbrozenqbrozen Posts: 16,897
    I'm having a tough time following your posts. I thought you used the term "capitalized" to mean the total the interest is charged on. The simple question is, "does NJ charge interest on the tax if you don't pay it up front?"

    I'm saying no, because that's what I've read. Are you saying yes or no?

    '13 Stang GT; '86 Benz 300E; '98 Volvo S70; '12 Leaf; '08 Town&Country

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