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## Comments

6060.00200 x (24,600 + 18,000) + (24,600 – 18,000) / 36 = 268.53

Therefore, the total NJ sales tax liability amounts to...

0.07 x 36 x 268.53 = 676.70

The "lease payment" is based on the following data (we'll roll the tax into the lease)...

MSRP…………………….…… 30,000

Sell Price (S)...…………….…... 27,000

Acq. Fee (A)…………….…….. 600.00

Trade Equity (Q)...………..…… (1,000)

NJ Sales Tax........................ 676.70

Gross Cap………………..…… 29,276.70

Cap reduction (D)…………...… 500.00

Adjusted Cap (C)……………… 28,776.70

Money factor (F)………………. 0.00200

Residual Factor………………. 0.60

Residual Value (R)…………. 18,000.00

Term (N months)....…………. 36

NJ sales Tax Rate (t)………… 7%

and is computed as follows...

Lease Payment = 0.00200 x (28,776.70 + 18,000) + (28,776.70 – 18,000) / 36

= 392.91

Sorry,

John

1464,692If they are buying your car from Honda Finance, then that extra mileage will certainly make your car worth less to them, and that difference will be rolled into your new lease payment..

So, yeah.... you bring it in, and drive out with a new lease, no matter your mileage.... but, it will be reflected in your new lease

payment.No free lunch, I'm afraid...

Now, I don't necessarily agree that high-mileage drivers shouldn't lease... Properly constructed, a high-mileage lease can be the cheapest way to go, especially if you would trade every three years, anyway..

regards,

kyfdx

MODERATORPrices Paid, Lease Questions, SUVs

3,60214I am pretty sure the dealer will buy it for resale, so now it is a matter of negotiating the trade in value? I don't believe Honda will let me sell the vehicle to a 3rd party either? I guess if they don't give me the payoff amount I can just go turn it in myself, pay the mileage and go lease another vehicle. A little incentive if they really want the car.

This changes things a bit.

6Thanks

606You may want to try the Sorento message board...

http://townhall-talk.edmunds.com/WebX/.ef17c3f/0

and re-post.

I'm sure that one of the moderators or, a knowledgeable poster, will be happy to help you. This message board is reserved for questions concerning lease payment calculations for which you're not likely to get a timely response to your question.

John

64,692You can find it HERE

MODERATORPrices Paid, Lease Questions, SUVs

6606It's rare times like this that I wish that the edmunds website supported mathematical fonts.

Using differential analysis, the formula for the

change in payment, given a percentage change in the residual, with all other variables held constant is...%P = (f - 1/N)S(%r)**where

%P = monetary change in payment

f = money factor

N = term

S = Adj MSRP upon which the residual value is calculated

%r = percentage points change in the residual factor

EXAMPLEConsider the following hypothetical data...

Adj. MSRP = 25,000 (some options may only be partially residualized or not

residualized at all which lowers the MSRP hence "Adj"

MSRP

**)Money Factor = 0.00200

Term = 36 months

Net Cap = 20,000

Res. Factor = 60%

Res. Value = Res. Factor x Adj. MSRP = 0.60 x 25,000 = 15,000 for 12K miles

Using the money factor formula, the above data yields a payment of...

P = 0.00200 x (20,000 + 15,000) + (20,000 - 15,000) / 36

= 208.89

But, if we lower the mileage to 10K, the residual factor may increase from 60% to 62%... a 2 percentage points increase (+2% or +0.02)... the residual value increases to 15,500 (0.62 x 25,000) and so, the new lower payment is...

*P = 0.00200 x (20,000 + 15,500) + (20,000 - 15,500) / 36

= 196.00

Observe that the payment dropped by 12.89 (i.e., -12.89).

We can easily calculate this payment change (-12.89) by using one formula instead of two and circumnavigate a lot of work just by using the above forrmula...

%P = (f - 1/N)S(%r)**= (0.00200 - 1/36)(25,000)(+0.02) (the positive sign indicates an increase)

= -12.89 (the negative sign indicates a decrease)

This formula has the advantage of quickly determining how your payment will change (up (+) of down (-)) and, by how much.

**Toyota is notorious for not residualizing the destination charge and floormats. I'm not sure if they deploy residual factors or not. If not, then they use flat dollar amounts instead. In this case, S(%r) is simply the

change(up (+), down (-)) in the residual dollar amounts.Questions? Please let me know.

All the best...

John

9106Best,

Artwheels

6Best,

Artwheels

17Any feedback appreciated.

606Sometimes, fund providers, especially the manufacturer finance captives (e.g., BMW, IFS, etc), will reduce the money factor in exchange for a refundable security deposit. Some will even allow multiple security deposits (MSD's) in exhange for an even great reduction in the money factor. MSD's are usually fantastic no-brainer deals for the consumer. For instance, let's assume that each security deposit reduces the money factor by 0.00007 and that the limiting number of MSD's is 7. This means that the max reduction is 7 x 0.00007 or 0.00049. So, if the prevailing money factor is 0.00200 and 7 MSD's are advanced, then the adjusted money factor is 0.00200 - 0.00049 = 0.00151

Hope this helps,

John

64,692It isn't like dealing with a sleazy landlord, who makes up charges just to keep your money..

Now their end-of-lease charges may be onerous, and out of line.. but, it won't be related to the size of your security deposit...

MODERATORPrices Paid, Lease Questions, SUVs

1I am about to conclude my 2nd lease with Honda and am now looking at the market to see what vehicle I would like to move into.

The last time I leased with Honda, I waited until I saw an advertised lease that I wanted and then walked in to the dealership and signed up for that lease - amazingly enough at the advertised price.

This time, I am looking at a 2010 Honda CRV, and while they are advertising the LX model for $239 @ month with $1999 down, I want the EX model.

So my question for you guys, is how do I determine what I should pay to move up to the EX model? That is of course with the thinking that I can get the same 'market rate/percentage' like I did last time.

Thanks for the help!

Kim

PS. All my Honda leases have been with the same dealership, if this matters at

118$31730 MSRP

$30392 agreed price

cap cost $31025 (not sure where the difference comes from between agreed price and cap cost?)

36 months

12000 miles per year

$21259.10 or 67% residual

$973.23 tax

.00200 Honda Finance lease money factor

250 doc fee

$54.50 title/reg

$595 Acquisition fee

Rolling first month into lease so 0.00 out of pocket at lease inception

606The gross cap is the sum of the agreed upon value and any amounts financed. The adjusted cap is the gross cap less any cap reduction. So, when you say that the cap cost is $31,025, I have no idea whether you're referring to the gross or the adjusted. It's unlikely that it is the gross cap as it doesn't capture the $973.23 tax as well as the $250 doc fee and $595 acq fee. There is a lot of information missing. I need an itemization of amounts financed as well as cap reductions. All numbers must be stated to the penny. Ball park numbers don't cut it.

You didn't indicate your state or sales tax rate but I have a hunch you're in Ohio judging by your numbers. If so, Ohio Honda dealerships do not compute monthly payments correctly in those instances where the first payment and taxes are capitalized. This has been an on-going complaint of mine for many years and no one seems to want to do anything about. It's sloppy business and, frankly, I won't tolerate it. A few weeks ago, I leased a 2010 CR-V and refused to sign the lease until all numbers were spot-on. It took them a few days, but eventually they corrected it. Actually, I think the software providers are the problem.

At any rate (no pun intended), the best thing to do is ask the dealer for their lease worksheet. This is a computer generated document that will tell you everything you want to know and then some. Don't let them tell you that they can't give it to you because that's a lot of horse dump. If you like, you can email it to me at

diffeq@zoominternet.net

and I'll be happy to analyze it for you.

John

118Question, if I am putting 0.00 out of pocket, wouldnt all fees/taxes be financed as part of the deal plus the first monthly payment? So the cap cost would actually read higher than what he told me was cap cost? Maybe I am misunderstanding it?

Maybe I am

wayoff and just need to stick to the lease worksheet?!Yes, Ohio is correct for tax

Thanks again

606Here 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.

John

1182Basically, do you pay tax on the portion you lease for or for the entirety of the negotiated sales price of the car?

64,692Unfortunately, I believe Maryland is one of those states..

MODERATORPrices Paid, Lease Questions, SUVs

606There 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.

John

5I 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.

Thanks,

John

23I 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?

:confuse:

any thoughts?

606You'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…

www.autoleasegeek.com

Hope this helps!

John

11--------------------------------------

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 ) ) ) ) ) ) ;

end

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

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

pay = pay / ( 12 * year ) ;

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

return

--------------------------------------

Examples:

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

23