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How to Calculate Monthly Lease Payments



  • delta737hdelta737h Posts: 626

    Here is how it works...

    Agreed Upon Value (sell price) + Amounts Financed = Gross Cap

    Amounts financed include your first payment, doc fee, acq fee, DMV fee, and taxes.

    Gross Cap - Cap Reduction = Adjusted Cap Cost

    If there is no Cap Reduction, then Gross Cap = Adj. Cap.

    Res Factor x MSRP = Residual Value

    Monthly Pmt = money factor x (Adj. Cap+Res Val.) + (Adj. Cap - Res Val.) / Term

    I'm happy to review the lease worksheet and look forward to receiving it.

  • Thank again John. I got ahold of the dealers worksheets and emailed them over to you this evening.
  • I have a question regarding paying taxes. When a leasing special says excludes taxes, tags, and fees. I live in MD. When you pay taxes for a car lease do you pay on the sales price of the car (as if you're buying) or do you pay tax on the monthly payment? I understand that you can roll your taxes into your monthly payment; however, the tax on the sales price of a car such as the Accord in MD (6%) is much greater than the tax(6%) on the sum of all the monthly payments. Can someone please explain.

    Basically, do you pay tax on the portion you lease for or for the entirety of the negotiated sales price of the car?
  • kyfdxkyfdx Posts: 167,259
    It depends on the state.. The majority of states tax the payment, each month, or tax the total of payments.. However, there are a few (maybe 10?), that tax then entire sales prices of the car..

    Unfortunately, I believe Maryland is one of those states..

    Did you get a good deal? Be sure to come back and share!

    Edmunds Moderator

  • delta737hdelta737h Posts: 626
    edited November 2010

    There are four (4) methods used to compute sales tax ...

    (1) Tax the lease payment as they are received. This is the easiest and by far the
    most commonly used method in such states as FL, PA, and CA
    (2) Tax the selling price (IL, MD, TX, WA)
    (3) Tax the sum of the taxable payments (NJ, NY, OH)
    (4) Tax the depreciation (CO)

    Every state uses one of these methods. Dealers do not determine how sales tax is computed; individual states make this determination and regulate, accordingly. Depending upon how the lease is structured, the sales tax calculation can be very straight-forward and easy or quite complex. To compound the problem, states have different regs regarding the taxability of fees and rebates. Some tax acquisition fees and rebates; others don't. Those that tax depreciation often define depreciation differently with respect to one another. Some define it as the difference between the adjusted cap and the residual while others define it as the difference between the sell price and residual. Some use the mathematically correct formulas to compute taxes in those instances where taxes are capped in the lease; others don't such as NY. Some states levy tax on tax (Yup, it's NY) when taxes are capped. This, of course, is illegal in most states. I have no clue why this has gone unchallenged in NY. Perhaps no one realizes it except the NY Dept of Revenue's Sales Tax Division.

    In Maryland, tax on a lease is levied on the selling price (i.e., Agreed Upon Value) at 6%. I'm not sure whether they call this tax a sales tax or a titling tax but it is levied on the sell price for both leases and purchases.

    Hope this helps.

  • Hi all!

    I am not to bright so I am looking to you who are!

    I am looking at leasing the Honda Accord LX the dealer has three offers:

    Starting at MRSP at 22,605 with 2000 trade-in to 20,605 at $285 for 3yrs/15K miles per year and nothing down;

    Starting at MRSP at 22,605 with 2700 discount to 19,905 at $241 for 3yrs/15K miles per year with 1500 down

    Discounted MRSP to 21,105 with 700 trade-in to 20,405 at $248 for 3yrs/15K miles per year with 1500 down;

    I cannot figure out what they are doing….???

    I am reading and studying but I cannot differentiate yet between vehicle price, gross cap price, cap reduction price and adjusted or net cap price?

    Any help is greatly appreciated.

  • Hello:
    I have been quoted this via email:

    36 months/12K
    Selling price $29,918
    MF .001390
    Residual 58%
    License fee $307
    Doc fee $259
    "Inception fees" $1932.65 including "DMV fee, tire tax, NJ tax, doc fee" (? would that mean I'm paying all sales tax up front? at 7%)
    "Buy out" $19299.50
    Monthly payment $380.74

    I'm not the brightest bulb in the math class but I have been using a lease worksheet I found for Excel and am coming out with a monthly payment closer to $360. I think I may have been calculating the tax incorrectly, but for my life I can't figure it out.

    Otherwise if you think this might be a good deal, I want to lock him in!

    Separate question: this is my 4th Honda and 3rd dealer. I am finding that when I go back to my previous dealer, they never seem very interested in my business. (not just Hondas, but previous other mfr leases as well.) Do they not make much commission on leasing? Why do I now have to do all the pursuing, after having received their letters in the mail for the last 6 months begging me to come in? I gave my salesman 4 weeks and when I called to follow up, he had forgotten about me (though he wouldn't admit it) then emailed me a ridiculous quote to which I responded (in a nice way) and haven't heard from him since?
    any thoughts?
  • Greetings ayalakay!

    You're doing just fine and have raised some good questions. Your 380.74 payment does not capture NJ sales tax which amounts to 959.43. In order to capture this tax, your payment would have to be 408.71. Here is the breakdown of your lease quote based on the information you have provided…

    MSRP……………………….. 33,275.00

    Sell Price……………………. 29,918.45

    Amounts Financed

    AHFC Acquisition Fee……… 595.00

    Gross Cap Cost…………….. 30,513.45
    Cap Reduction……………… 0.00
    Adjusted Cap………………. 30,513.45

    Money Factor………………. 0.00139
    Residual Factor……………. 58%
    Residual Value……………. 19,299.50 (Res. Factor x MSRP)

    Monthly Payment…………. 380.74

    Amounts Due at Signing

    1st. Payment………………… 380.74
    NJ Sales Tax @7.00%........... 959.43
    Doc Fee……………………… 259.00
    Doc Fee Tax @7.00%........... 18.13
    DMV Fees…………………... 307.00
    Tire Fee……………………... 7.50
    TOTAL DUE………………… 1,931.80

    I seem to be $0.85 short of your $1,932.65. Perhaps you rounded a few numbers? I’m guessing that your 360 payment (actually, 363.39) may be the result of not capitalizing the 595 acquisition fee.

    As for the dealership issues you’re having, I wouldn’t worry about it. They need you more than you need them. The commission on leases is no different than the commission on sales. The reason is that every leased car is a sold car. Someone is buying it and that someone is usually the fund provider (AHFC in your case).

    Should you have further questions or would like a cost-saving lease proposal that makes sense, please visit my website…

    Hope this helps!

  • Here is a quick Matlab/Octave script you can use to figure out monthly payments on car or house or anything :-)


    function test_mortgage( cost, downpay, rate, year )

    base = cost - downpay;

    disp( strcat( [ 'Loan = ' num2str(base) ] ) );

    pay = 0;

    for i = 1 : 12 * year

    pay = pay + ( ( base / 12 ) * ( ( 1 / year ) + ( ( rate / 100 ) * ( 1 - ( ( i - 1 ) / ( 12 * year ) ) ) ) ) ) ;


    disp( strcat( [ 'Interest = ' num2str((pay - base)) ] ) );

    disp( strcat( [ 'Total = ' num2str(pay) ] ) );

    pay = pay / ( 12 * year ) ;

    disp( strcat( [ 'Monthly = ' num2str(pay) ] ) );




    1. Car for $14,670, $0 down, 5 years 0% APR loan:

    >> test_mortgage(14670,0,0,5)
    Loan = 14670
    Interest = 0
    Total = 14670
    Monthly = 244.5

    2. $20k credit card balance with 19% APR to be paid off in 3 years:

    >> test_mortgage(2e4,0,19,3)
    Loan = 20000
    Interest = 5858.3333
    Total = 25858.3333
    Monthly = 718.287

    3. House for $1.2 million, $250k down, 30 years 4% fixed rate mortgage:

    >> test_mortgage(1.2e6,2.5e5,4,30)
    Loan = 950000
    Interest = 571583.3333
    Total = 1521583.3333
    Monthly = 4226.6204
  • Many Thanks, John!
  • karl_ekarl_e Posts: 3
    Hi. I’m new to Edmunds and the knowledge I am gathering is great! Two quick question; is cap cost the same as selling price (minus incentives, down payment, left over from trade in.). Is base lease rate and money factor the same? If I have a base lease rate of 2.0 what am I calculating that with?

  • delta737hdelta737h Posts: 626
    edited June 2011
    Welcome to Edmunds, karl!

    Cap cost and sell price are, conceptually, two different things. Let's look at some terminology...

    The agreed upon value is the FRBB's Regulation M term for selling price. If amounts are capitalized (i.e., financed) in the lease (e.g., acquisition fee, taxes, etc.), then those amounts are added to the agreed upon value. The sum is called the gross capitalized cost. If there are cap reductions (e.g., cash, trade credit, incentives), then these amounts are deducted from the gross cap. The difference is called the adjusted capitalized cost. If there are no amounts financed and no cap reductions, then the agreed upon value, gross cap, and adjusted cap will all have the same value.

    The base lease rate is that rate with zero dealer profit and is offered to those with outstanding credit. The base rate, AKA buy rate, doesn't mean the dealer doesn't make a profit on the deal. It only means that they don't make a profit on the financing piece. Money factors are generally based on a tiered structure. For example

    0.00200 + 0% reserves (0 dealer profit)
    0.00220 + 1% reserves
    0.00240 + 2% reserves

    Some fund providers incorporate a fixed dollar amount into their money factors which means that the dealer earns a profit regardless of the money factor. I think American Honda Finance does this but I'm not not sure.

    A base rate of 2 may mean a money factor of 0.00200 or, it may mean an interest rate of 2%. And so, you need to get clarification. Ally Bank (GMAC) is one of only a few fund providers that uses an interest rate.

    The money factor is used to compute your monthly payment...

    Payment = F x (C + R) + (C - R)/N

    F = Money Factor
    C = Adjusted Cap Cost
    R = Residual Value
    N = Term (months)

    If you have an interest rate, it can be converted to a money factor approximation by simply dividing the interest rate by 24. So, a 2% interest rate equates to a money factor of approximately 0.02/24 = 0.00083. By the way, money factors are formatted as 0.00XXX.

    Hope this helps.

    The AutoLeaseGeek
  • karl_ekarl_e Posts: 3
    Yes. It cleared up the difference. Thank you for the details.
  • You could do ALL of this with a calculator and possibly mess up, or you could punch the numbers into 's calculator">link title
  • im_brentwoodim_brentwood Posts: 4,883
    In New Jersey you only pay sales tax on the difference between the sales price (gross cap) and the residual, NOT the payment.


    Car is $20,000
    Acq fee is $595

    Gross cap cost $20,595

    residual is $11,000

    $9,595 is taxable.

    Basically you're only paying sales tax on the depreciation, NOT the depreciation plus interest.
  • delta737hdelta737h Posts: 626
    edited July 2011
    Unless there have been NJ legislative changes recently and, with all due respect, consumer retail leases in NJ are taxed in much the same way that they are here in Ohio. In Ohio and NJ, tax is levied on the sum of the monthly payments, including interest. To wit and per

    "Agreements for a term of more than six months: The lessee pays the sales tax to the lessor either on the original purchase price of the leased property or on the total of the periodic payments required under the lease agreement. (Whether the tax will be calculated on the purchase price or the total of the periodic payments is negotiable between lessor and lessee.)
    Interest or finance charges will not be excludible from the lease payments when calculating the amount of tax due."


    The AutoLeaseGeek
  • im_brentwoodim_brentwood Posts: 4,883
    It's different for automobile sales.

    Pararaph 63 on page 16. Legislation has been effect since at least 1989. There's a more concise explanation, but it's not on a public website (DealerTrack)

    I work New Jersey lease deals every day, it's important to know this as a number of unscrupulous dealers will use the other method during negotiations to pick up gross.
  • delta737hdelta737h Posts: 626
    edited July 2011
    Unless I'm missing something, there is nothing in the New Jersey Sales and Use Tax Act, Streamlined Legislation (P.L. 2005, c. 126, effective October 1, 2005, that suggests or implies that SSUTA does not apply to retail automobile leases.

    The following document...

    Streamlined Sales and Use Tax Law: Motor Vehicle Leasing Issues
    (Based on Questions from the National Vehicle Leasing Association)

    The information below applies to leases entered into on and after 10-1-05, which is the effective date of the adoption of the streamlined sales tax provisions.

    at paragraph (8) provides...

    8. What is the tax base under the total lease payments method?

    For purposes of the total lease payments method, is the amount of the lessee’s trade deficit paid off through the lease excluded from the tax base? Yes, the amount of the trade deficit is excluded.

    Are separately stated delivery charges excluded? Delivery charges incurred to transport the vehicle to the dealer/lessor’s place of business are included in the tax base. Prior to October 1, 2006, delivery charges that related to delivery of the vehicle by the dealer/lessor directly to the lessee were excluded from the tax base. On and after October 1, 2006, delivery charges that relate to delivery of the vehicle by the dealer/lessor directly to the lessee are included in the tax base.

    Are separately stated interest, financing, and carrying charges excluded? No, such charges are not deductible in determining the tax base under the lease payments method.

    Also, see...

    You cited an old document from 1989. The revised (SSUTA 2005) seems to supercede the old (1989). Accordingly, and without definitive proof to the contrary, I would reasonably assume that total payments are taxed, including interest, per SSUTA (2005). I would like to see the more concise explanation from DealerTrack and confirm the same with the NJ Dept. of Revenue. Until then, I have little choice but to assume that NJ currently taxes retail automobile leases at 7% using the total number of payments, including interest, as the tax base unless, of course, the code of regulations state otherwise.

    If what you're saying is true, then it's a half-assed way for the NJ Dept. of Revenue to do business as there doesn't seem to be any documentation regarding your claim.... at least not at the NJ website that I can see. Of course, definitive proof can be found in the NJ Code of Regulations as that's the final authority and not the website.

    What you're claiming is that tax is levied on the depreciation amount disclosed in the lease. If the tax rate is 7% and the depreciation amount is $8,000, then the sales tax is $560. I assume that NJ defines depreciation as the difference between the adj cap and the residual per the FRBB's Reg. M. In addition, cash cap reductions (e.g, customer cash, cash incentives, loyalty cash, etc.) are taxable and trade deficits (i.e., negative equity) are not taxed as well as trade credit. Also, acquistion fees are taxed seperately if not included as an amount capitalized.

    Just out of curiousity, have you made tax calculations manually to confirm that your software is computing tax on just the depreciation which excludes interest charges? Who is your software provider?

    The AutoLeaseGeek
  • im_brentwoodim_brentwood Posts: 4,883

    The state itself is half-assed, as you say, particularly the MVC (Which seems to make up rules as it goes along).

    Unless the laws have recently changed dramatically, New Jersey has historically only charged sales tax on the principal, not the interest.

    Bank fees have always been taxable, Doc fees and MV fees are not taxable; warranties, etc are.

    Trade differences, irrespective of equity or not, are tax exempt.

    Granted the deals that I usually work are highly subvented, rate driven programs where the total lease charges are minimal, but it's still worth bearing in mind. I do know that NJ as well as other states have different ways of computing taxes on leases, it's possible that upfront taxes may well be different than financing them, there was, I do recall, a loophole in Illinois law that allowed this at one point.
  • delta737hdelta737h Posts: 626
    edited July 2011
    You said...

    "Unless the laws have recently changed dramatically, New Jersey has historically only charged sales tax on the principal, not the interest. "

    That's true but, apparently, SSUTA (2005) changed all of that. I've seen several different NJ dealer (Honda, Infiniti, GMAC (Ally), FMC) lease worksheets, over the last 22 months, compute sales taxes that comply with the SSUTA (2005) legislation in which interest is taxed. Moreover, sales tax is disclosed in the lease agreement which triggers a paper trail. If a dealership consistently over taxes or under taxes, and has the misfortune of being selected for a state audit, it could find itself in a very taxing situation (pun intended). And so, it's extraordinarily unlikely, and a real stretch, to say that these dealers are pocketing the alleged excess tax. Not only is it wrong and downright immoral, no dealer with any brains is going to risk engaging in such illegal practice. Furthermore, there is no way on earth that a fund provider like Honda or GMAC is going to permit sales tax to be computed in a way that violates state laws... ditto for the software providers. Otherwise, it would create a liability culminating in a river of lawsuit filings each hoping to be eventually certified as a class action.

    There are four (4) methods used to compute sales tax…

    (1) Tax lease payment streams as they are received. This is the easiest and by far the most commonly used method in such states as CA, FL, PA, and WA

    (2) Tax selling price (IL, MD, NJ, SC, TX, VA)

    (3) Tax the sum of the taxable payments (MN, NJ, NY, OH)

    (4) Tax depreciation (CO)

    Yup, in NJ there are two methods, both negotiable, in which leases can be taxed. One is tax levied on the selling price (i.e., agreed upon value); the other is tax on the total payments. I can't imagine why any consumer would opt to be taxed on the sell price as it's always cheaper to tax the total payments.

    Depending upon how the lease is structured, the sales tax calculation can be quite complex especially in NY. To compound the problem, states have different regulations regarding the taxability of fees and rebates. Some tax acquisition fees and rebates; others don’t. Those that tax depreciation often define depreciation differently with respect to one another. Some define it as the difference between the adjusted capitalized cost and the residual while others define it as the difference between the sell price and residual. Some use the mathematically correct formulas to compute taxes in those instances where taxes are capped in the lease; others don’t.

    In NJ and Ohio, it's illegal to levy sales tax on sales tax. So, whether you pay all the sales tax at lease inception or, finance the tax in the lease, the amount of sales tax liability is the same either way. However, in NY , it's a different story. It's amazing to me why the constitutionality of sales tax on sales tax hasn't been challenged in both federal and NY state courts.

    The AutoLeaseGeek
  • kyfdxkyfdx Posts: 167,259
    I do think NJ lease taxation has changed in the last couple of years..

    As mentioned, it used to be strictly on depreciation, paid upfront... Now, it's on total payments, again paid upfront...

    That's just from anecdotal evidence (you know, reading hundreds of posts, each day).


    Did you get a good deal? Be sure to come back and share!

    Edmunds Moderator

  • is residual calculated as a percentage of MSRP or capitalized cost. Im looking at a kia sorento, and it seems they calculate the residual from the capitalized cost, not the msrp (hence raising the monthly lease payments). This seems to go against most of what i know, is this a Kia practice or is it industry standard or am i missing something?

  • kyfdxkyfdx Posts: 167,259
    Residuals are calculated on MSRP.

    Some makes (Toyota, for example) restrict the dollar amount of options that can be residualized. You can't really calculate the residual on a Toyota... you just have to get it from the dealer.

    I haven't heard of Kia doing that, though..

    Did you get a good deal? Be sure to come back and share!

    Edmunds Moderator

  • I admit I have probably never gotten a really good deal on a car, and have gotten REALLY ripped off more than once. I have done better on my last few purchases, since I started researching before my purchase, but unfortunately my most recent purchase a certified Yukon Denali, was a LEMON. I have literally had things falling off this SUV. It has had to have more repairs in the 6 months that I have owned it than all the cars I have ever owned put together! The warranty is only good for 6 months, and there are some major concerns about what I will do then. The dealership I purchased it from has been a nightmare...

    I have about $8,000 ( I am being conservative) equity in the Yukon, and am ready to just trade it in for a lease. But to be honest I am scared to death to make another mistake. I am tired of being ripped off. I need something that seats more than 5 people ( we are a family of five) and I carpool a lot. So I am looking at an SUV or crossover of some type.

    I have read through some of these posts and the math just makes my head hurt. I see these adds for low leases but they are always for a stripped down model. I tend to like the higher end trims. Also I only drive about 10,000 miles a year.

    Where do I start?
  • im_brentwoodim_brentwood Posts: 4,883

    First, in some states, trading in an owned vehicle on a lease will give you a tax credit.

    Second, I wouldn't put any more than $2-3k of your truck's equity down on a lease. Most advertised lease payments require a lot down, are plus tax, MV, dealer fees and include rebates that you may not qualify for. Read the fine print.

    A good rule of thumb is that every $1k out of pocket on a 3 year lease is about $30/mo in payment.

    So if the ad is $5k out of pocket, and you want to throw $2k out of pocket, assume that the $299 will be more like $389.
  • apj74apj74 Posts: 4
    I am getting into a lease for a 2012 Passat SE (automatic 2.5L) with an MSRP of ~25700 for 297.50/month for 36 months with 36000 miles. Any comments on this deal?
  • Hi, I need to make a deal by tomorrow and was wondering if anyone can tell me these numbers are correct. Its on a lexus CT200H but the numbers look fishy to me.

    I have tried alot of lease calculators but can't get the numbers they are getting

    Vechical price - $36,509.00
    Discount - $3,233.03
    Rebate - $750

    Total saling price - $32,525.97

    Sales tax - $2094.87
    Tag/title - $298.75
    Dealer fee - $699.99

    Balance Due - $35,626.04

    money factor is .00160
    Residual is - 62%
    I live in florida and I'm putting down $5k and they say my monthly payment will be $365/month for 36/months 10k miles lease

    I can't get the same numbers as them, at first I asked why they charge me tax on the whole vechical if i'm leasing, but they say when they compute it, it's without that tax.

    Can someone compute this for me and see what my monthly should be? The $5k down, part will be 1st months payment. - this is for a lexus
  • sebring95sebring95 Posts: 3,241
    I can make the numbers work almost to the penny if the residual is based on the selling price (not MSRP). Are they stating the 62% residual or are you backing into that? Do they give a stated $$ amount for the residual and if so, what is that amount? I'm not familiar with Florida sales tax so I'm not sure if it's charged on the full sale amount or just the payment. If it's not on the full sale amount then we're off by an even wider margin unless the $365 includes the sales tax.
  • qbrozenqbrozen Posts: 28,124
    According to the info I found online, FL calculates the tax on the lease payment. So you can just take that $2094.87 out of your equation. Calculate the payment, then add your normal sales tax rate to the payment.

    Your residual should be 22635.58. Is that correct?

    '07 ML63, '08 Charger R/T Daytona; '67 Coronet R/T; '14 Town&Country Limited; '18 BMW X2. 52-car history and counting!

  • yes residual is 22635

    now they said they used a money factor of .0026

    and they gave me a new quote with .0016 (that's what they said)

    3919 down will be $339/month

    that 3919 down includes doc fees, tag and 1st month payment

    does that first money payment make a diffrence? that's confusing me

    thanks for the reply
  • yes residual is 22636.58

    is it better for me to pay off the dealer fees and tag fees first instead of putting all my money down as a cap reduction?

    They are saying I can't use my rebate in the net cap cost total, i can use as a cap reduction though, isn't that same thing?

    now they are charging me aqusation fees also since I found their numbers were wrong. Should i just walk away from them? they are puting some insurance fees etc in now without showing me the total selling price.
  • qbrozenqbrozen Posts: 28,124
    yes, walk away.

    '07 ML63, '08 Charger R/T Daytona; '67 Coronet R/T; '14 Town&Country Limited; '18 BMW X2. 52-car history and counting!

  • Kirstie_HKirstie_H Posts: 11,101
    Totally agreed!

    Leasing can be VERY complicated and confusing, even if everything is transparent, and especially for first-time leasers. If you are not completely sure about the deal and the dealership DO NOT lease from them.

    Start over with another dealership. Feel free to come back here as many times as you need to and ask questions until you find a deal that you feel comfortable with. We have several members who are knowledgeable and willing to help you get the right deal - and thanks to qbrozen for helping this member!


    Need help navigating? [email protected] - or send a private message by clicking on my name.

    Share your vehicle reviews

  • qbrozenqbrozen Posts: 28,124
    exactly as kirstie said... its complicated. And, unfortunately, some dealers use that to their advantage and try to make it even more complicated and confusing so they can milk you for more money. Don't let them do it to you!

    '07 ML63, '08 Charger R/T Daytona; '67 Coronet R/T; '14 Town&Country Limited; '18 BMW X2. 52-car history and counting!

  • jsl1949jsl1949 Posts: 13
    Just leased 2012 CTS Premium MSRP $49,165, total drive off $1500, 39 months, 12k, $525 including tax. Used Costco buying service. No hassle. Los Angeles.
  • pknopppknopp Posts: 13
    The problem with leasing is getting the information one needs to compare leases. It's easy to find what your interest rate will be. It's not so easy to get the money factor or residual in a lease.

    You ask the dealer what the money factor is and they look at you like you've asked them something offensive.
  • nyrgoal99nyrgoal99 Posts: 7
    edited March 2012
    I dont think this is a good deal but I want some advice

    Discounted to:$25,081
    Tax Included: $12,23

    Payment options

    371 x 36 months, 0 Down
    171.31 x 36 months, $6446.17 down

    12K miles
    Residual $17460
    4.8% financing on lease

    My feeling is that the 4.8% is high, and I dont understand the tax. 1,200 seems really high, plus I have a vehicle worth 9-10K to trade in that I do not think they factored in.

    Thoughts? What should I be getting this car for?
  • Hi all,

    I am looking to lease a 2012 lexus or audi and would like your opinions. A friend of mine just got a lexus ES 350 touring edition (MSRP 40275) for 7000$ down and 300/month. Is that a good deal? This is in New jersey. While I am currently leaning towards the lexus I want to know if the above is a good deal and if I should try to get the same.

    What are your thoughts?

    Thank you for your help.
  • Kirstie_HKirstie_H Posts: 11,101
    Since your question is about a specific vehicle, you're better off posting in our Honda CR-V Lease Questions discussion. That's where you'll see other members posting their deals on CR-V leases.


    Need help navigating? [email protected] - or send a private message by clicking on my name.

    Share your vehicle reviews

  • Kirstie_HKirstie_H Posts: 11,101
    This topic is more for questions about how the lease deal is calculated. For specific vehicles, we have "lease questions" discussions for each make/model where you can ask about pricing, etc., for a particular model.

    Here's the Lexus ES lease discussion:

    One tip - putting $7,000 down on a lease is NOT a good idea.


    Need help navigating? [email protected] - or send a private message by clicking on my name.

    Share your vehicle reviews

  • Thank you. I have moved it to the Lexus forum. Just out of curiosity though - what is the downside of the high down payment? Is there a difference between high downpayment + low monthly vs low (or 0) down + high monthly? The net amount will be the same right? Or is there something I am missing here?
  • Kirstie_HKirstie_H Posts: 11,101
    The high downpayment only reduces your monthly lease payment. Why do you want them to have your money instead of YOU having your money for that time, with the potential to earn interest off of it?

    But here's the big risk: if your car were to be totaled, your insurance would pay off the finance company. They would not, however, return your $7,000 downpayment to you. You would then have no car and no $7,000 for downpayment on a new car. That money is just GONE.


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  • That makes sense. Thanks. Definitely something I will keep in mind. I did think about the potential interest that could be earned but thought that with the rates so low such savings would be negligible. I thought in the deal above the low monthly was sweet enough to offset the high down.

    The totaled factor is something I did not consider. That is a huge amount to lose in the worst case scenario.

    One last question on this - the dealers who offer 0 down - how do they charge for the bank fee, acquisition fee, taxes etc. Is it all added to the monthly payments?
  • Kirstie_HKirstie_H Posts: 11,101
    I'll let someone else answer, as I'm not a leasing expert at all. I'm sure we have members around here who... know things.


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  • jwilliams2jwilliams2 Posts: 910
    One last question on this - the dealers who offer 0 down - how do they charge for the bank fee, acquisition fee, taxes etc. Is it all added to the monthly payments?

    You are correct. It is added to the cap cost and included in the payments.
  • johngettlerjohngettler Posts: 12
    Hello all,

    1. Unfortunately, there isn't a law requiring auto makers to publicly disclose their lease money factor rates (interest rate) or their residual rates 9calue of car after duration and miles are put on.) This makes it *very* difficult to compare lease incentives across different comparable makes, models and trims. I wish there were a law enacted that would force this information to be as clear as auto loan interest rates are today.

    2. Somehow, Car_man who is a "host" on these excellent Edmunds Forums, seems to thankfully have access to nearly unlimited lease money factor and residual info from most makers, and for years has been reporting very accurate information in reply to each individual request. But he is only one man, and it can take some days for him to get back to each person. I have always been super curious, Car_man, where *do* you get this information, and how come we all can't just get to the data directly? I know of course, it's not up to you, but can you give us some insight on how you gather this info? And why can't or won't just publish this extremely valuable data in an open manner? Of course, thank you for all the information that you *do* pour out every day Car_man.

    3. The best always accessible website that I have found that has a good amount of detailed lease info for many cars, is this link below (sorry Edmunds, it's from It is *not* always accurate, and should be taken with a grain of salt, but I have found it to be helpful, but not nearly as accurate as Car_man. Note that this site lists money factors as a percentages, which is actually the money factor number times 2400 (for example MF 0.0006 x 2400 = 1.44%) to get a fairly comparable number to standard auto loan interest rates. Just enter you zip, and then click into each model and trim to see detail lease info.

    4. Each dealer *should* be able to provide you MF and Residual for a specific car, with a specific lease length in months, and miles per year. But you have to "get involved" with a sales guy to begin to extract this kind of info. Ugh.

    5. There is a company called ALG that publishes a "residual guide" each quarter of what they recommend as the residual for each model and trim, after different lease lengths of time, and different mileage usage. They *will sell* you a single copy of their "Residual Percentage Guide 2012 Models National" book for about $50 by calling the number on this link, 1-805-898-8400. The manufacturers *do not* always match these residuals all the time, but it *is* a fair way to generally see what models and trims would give you a relatively cheaper monthly payment, due to holding their value better.

    Hope this helps everyone.
    John Gettler
  • Hi - I'm a first time car buyer and I'm planning to lease the Mercedes C250 Coupe. I don't believe this is a great deal, but I'd love to hear from someone about this that is far more experienced than myself:

    MSRP: $44,250 (includes multi-media, premium package, and 18" alloy wheels, keyless go)
    Residual: $30545
    Annual Miles: 10,000
    Months: 36
    Payment: $647
    Due at Signing: $1250
    Sales Tax: 1.50% = 663.75
  • Kirstie_HKirstie_H Posts: 11,101
    This is more of a general topic for asking about how to calculate leases - you might find more specific help in our Mercedes C-Class Lease Questions discussion. We'll leave your post here, but if you click on my link and post in that discussion, you might get more feedback. You can also see what other recent buyers have reported.


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  • ksrpksrp Posts: 11
    I saw the following lease ad on a manufacturer's website --

    "$199/Month, 36-Month Lease, $1,999 due at Lease Signing. Includes 1st Month's Payment and Acquisition Fee. Excludes taxes, title and fees."

    Additional details in the fine print --

    MSRP $19,550 plus destination charge of $795. Payment based on capitalized cost of $18,440. Total payments of $7,160. Purchase option at lease end of $12,004 plus tax or price negotiated at signing.


    Firstly, I want to understand how the capitalized cost was arrived at. Shouldn't the capitalized cost be 19550+795-1999 = 18346?. They are claiming it is 18440.

    Also, I want to find the MF they are using. Here's my calculation from the $199 monthly payment. The depreciation payment is (18440 - 12004)/36 = 179. That leaves $20 for the interest, so (18440+12004)*MF = 20. That makes MF = 0.000657, so interest rate = 0.000657*2400 = 1.57%

    Is this calculation correct?

    Since total payments required is 7160 and each payment is 199, they are expecting 36 payments. Then why do they claim $1999 includes the first month's payment?

    Lastly, what should I expect to pay for 'taxes, title and fees" in California?

    Appreciate any feedback.
  • dwsindydwsindy Posts: 4
    edited July 2012
    MSRP. $41735
    Sell. $40564.25
    Cap cost reduction $5250.00
    Money Factor. $.000583. (1.4%)
    Residual. $22954.25
    Payment. $446.78
    Out of pocket
    First month & ?? $814.28

    The numbers don't seem to work for me. I come up with a payment of $404 which includes the 7% sales tax. What am I missing? Doesn't the cap cost reduction come off of the sale price so the net cap is $35314.25

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