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How to Calculate Monthly Lease Payments



  • jwilliams2jwilliams2 Posts: 910
    Yes, the cap cost reduction does come off the actual selling price to arrive at the net cap cost. I would ask what else is going into the payment number. Looks like there is somewhere around $1500 or so that needs explaining. Probably the acquisition fee plus??
  • kyfdxkyfdx Posts: 167,259
    What your example doesn't show is the actual capitalized cost... That could include other amounts not shown. The acquisition fee comes to mind, at first glance...

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    Edmunds Moderator

  • kyfdxkyfdx Posts: 167,259
    edited July 2012
    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.

    If $1999 is the due at signing, then it includes the first payment and you should only subtract $1800. BUT... what isn't disclosed is the actual selling price of the vehicle. In your assumption, you would be paying MSRP, which isn't good... Also, other additions to the CAP cost may not be disclosed, including the acquisition fee.. My guess? There is an acquisition fee of around $700, and the vehicle is discounted about $800 to arrive at that CAP cost

    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?

    Your math looks to be correct... Is the purchase option price the same as the residual? Usually it is, but not always... that could change the calculation... Most likely, you have it right.

    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?

    It's still 36 payments of $199..... paying other amounts at signing in addition to that ($1800) doesn't change what is actually being paid.. Just a legal disclaimer.

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

    Title/registration/document fees in California are roughly 2-3% of the purchase price, as a general rule of thumb... California taxes the monthly payment on leases.... So, if your local rate is 9%, then tax will be about $18/mo..


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

    Edmunds Moderator

  • dwsindydwsindy Posts: 4
    Thanks for the reply. Yes the destination charge or acquisition fee is not there so that is probably it. I wish they would of just told me that up front but they seem to always be about the payment and that is it. And in such a big hurry to get me down in front of the business manager.
  • delta737hdelta737h Posts: 626
    edited July 2012

    Some fund providers use an interest rate instead of a money factor. When I saw the $795 acquisition fee, I immediately thought of GMAC/Ally Bank who charges a $795 acq. fee. They also use an interest rate. So, here's my question: Who is the manufacturer? GMAC? I know that there are other providers that charge a $795 acq. fee, but I want to make sure whether this is a money factor lease or an interest rate before answering your question.

    I assume thast the numbers and all terminology that you provided are correct.
    For instance, you stated

    "Payment based on capitalized cost of $18,440"

    I have no idea what that means. Is that the selling price? Is that the gross cap cost? Is that the net cap cost? Frequently, dealers will erroneously use the term "purchase price" when they really mean "gross capitalized cost". So, there are a lot of questionable things here. For instance, I've assumed that the $18,440 is the net capitalized cost because that's the way most Ads disclose it.


    "MSRP $19,550 plus destination charge of $795."

    Just doen't make a bit of sense. Another thing that makes no sense is that the Ad states...

    "Total payments of $7,160."

    Makes no sense because 35 x $199 + $1,999 = $8,964

    The $1,999 includes the first payment of $199. Obviously, there is a cap reduction of $1,800 and the 795 acq fee appears to be financed in the lease.

    This Ad does not make one bit of sense. I think you need to double check it and ask some questions.

    Can you provide a link to the manufacturer's website please?

    Let me comment on your calculations...

    The average monthly depreciation is actually $178.77... and the average monthly finance charge is $20.22... and so, the money factor works out to be 0.00066424372...

    This is a rather strange-looking money factor because the money factor syntax takes the form 0.00XXX and, if rounded, amounts to 0.00066 which yields as payment of $198.87. Usually, the rounding of the money factor is not that extreme. And, although very close, I still get the feeling that this might be an interest rate lease. Another issue is that the residual factor amounts to 61.4% ($12,004/$19550) which is really strange. It should come out to a nice whole number. Something just isn't right.

  • ksrpksrp Posts: 11

    Thanks for your response.

    Regarding your point about paying MSRP, I was only walking through the calculation with the data in the ad. Just trying it on for size, if you will. We are not yet sure which vehicle we want to get and if it is this one, I will definitely negotiate to bring down the purchase price first.
  • ksrpksrp Posts: 11
    edited July 2012
    Thanks for your response, John.

    The numbers are terminology are correct. The manufacturer is Mazda and here's the link to the ad. It's the offer at the bottom of this page.
    link title

    Now your points/questions --
    > "MSRP $19,550 plus destination charge of $795."
    > Just doen't make a bit of sense.

    I don't know why it doesn't make sense. Is it the numbers themselves or the terminology?

    > "Total payments of $7,160."
    > Makes no sense because 35 x $199 + $1,999 = $8,964

    I assumed that 'total payments' refers to payments during the lease duration and does not include the $1,999 payment made at signing. As kyfdx explained, one reasonable interpretation is $1800 + $199 at signing and then 36 payments of $199 subsequently. In which case, 36*199 = 7164, which is close enough to their statement. My original question about the $7160 was why should there be 36 more payments if the initial payment included the first monthly payment. Shouldn't there be 35 more after the first payment? But I will accept kyfdx's explanation.

    > And, although very close, I still get the feeling that this might be an interest rate lease.

    I did not know that there are different kinds of leases. Please explain 'interest rate lease'. Are most leases some other kind? Does it change the calculation?

    Hopefully, you can look at the ad with the link I provided. I appreciate any further comments after you look at the ad.
  • delta737hdelta737h Posts: 626
    edited July 2012

    Could not find a lease fitting your description at the Mazda website. Knowing the model may have been helpful. Anyway, I was so focucsed on the $795 acquisition fee that when I saw...

    "MSRP $19,550 plus destination charge of $795."

    my mind blocked out the word "destination" and all I saw was $795 which I associated with the acq fee. Sorry. Now it makes sense. So, the residual is $12,004 meaning that the residual factor is 59% ($12,004/$20,345) based on a total MSRP of $20,345.

    Mazda uses a money factor as opposed to an interest rate. Ally Bank uses an interest rate. Interest rate payments are computed based on an annuity formula similar to the way loan payments are calculated except at the end of the term, there is a residual remaining which is analogous to a loan balance. This results in lower monthly payments than they otherwise would be.

    Because of the complexities associated with computing payments using an interest rate, many years ago the concept of "money factor" was introduced which is defined as the estimated interest rate divided by 24. Here's why...

    monthly payment ~ (annual int rate/12) x (net cap + residual)/2 + (net cap - residual)/Term

    So that...

    monthly payment ~ (annual int rate/24) x (net cap + residual) + (net cap - residual)/Term

    money factor ~ annual int rate/24
    (annual int rate/12) = estimated monthly interest rate
    (net cap + residual)/2 = average lease balance
    (net cap - residual)/Term = average monthly depreciation charge
    (annual int rate/12) x (net cap + residual)/2 = average lease finance charge

    If we assume an imputed money factor of 0.00066, then the monthly payment, assuming the capital cost of $18,440 is the NET capital cost, is

    0.00066 x ($18,440 + $12,004) + ($18,440 - $12,004)/12 = $198.87

    which is very close to $199. The bet here is that the NET cap is $18,440 and that the money factor is 0.00066. If so, then the selling price of the vehicle is...

    $18,440 + $1,800 - $795 = $19,445

    You need to research the selling price for this model vehicle as the selling price is the most important number in a lease. Use Edmunds, and TrueCar...

    Total payments of $7,160 does not make sense because you're paying $1,999 at lease inception which includes your first payment of $199 meaning that 35 payments of $199 remain. It also includes an $1,800 capitalized cost reduction. The $795 acq fee is financed in the lease and, therefore, is embedded in the $199 payment. As such, total payments should be....

    $1,999 + 35 x $199 = $8,964

    Federal regulations (Regulation M- Consumer Retail Leasing) manadate that cap reductions be included in the total of payments as well as the first payment due at lease signing.

    Let me emphasize that your first payment of $199 is due at signing and the remaining 35 are due over each of the next 35 months. You're making payments at the beginning of the term instead of at the end which is how loan payments are constructed. Your periodic payments form what is known as an annuity due because the first is paid up front (i.e., due immediately). A sequence of loan payments are what is known as an ordinary annuity because the first payment isn't due until one month from the date the loan is originated.

    Regarding your question...

    "My original question about the $7160 was why should there be 36 more payments if the initial payment included the first monthly payment. Shouldn't there be 35 more after the first payment?"

    There aren't 36 more payments... there are only 35 because you made the first payment at lease inception. Hence, total payments, including the $1,800 cap reduction, should be...

    $1,999 + 35 x $199 = $8,964

  • If the monthly lease payment is advertised at X number of dollars a month and the start up fee payment is listed at X dollars of month, what factor does bonus cash mentioned in the incentive have on the payment and down money. If the down payment is $2500 to start the lease and the bonus cash is $1000. does that equate to only $1500 down, or is the bonus cash already factored into the figures already stated?
  • kyfdxkyfdx Posts: 167,259
    In most ads, all of the incentives are already factored into the advertised payment and money down..

    I'm sure you can find an occasional exception..

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

    Edmunds Moderator

  • bsyahbsyah Posts: 11

    I used this forum to try and figure my own payments when negotiating 2 leases (one for my wife, one for me). We ended up being very close to what I was hoping for both on monthly payments and taxes/fees being paid up front.

    Now that I am reading through all my lease agreements I am trying to understand all the numbers. I still think I got was I was looking for but I am having trouble making sense of why some of the numbers are represented the way they are or why it is structured the way it is. I want to make sure I am educated on this so when my leases are up I can do better or so I can understand if I made mistakes. Any help would be appreciated.

    2013 Sorento EX w/ Premium Plus Package 36 month/15,000 mile
    MSRP - 31,075
    Residual - 55% or 17,091.25
    Agreed price - 29771.02
    Taxes - 1232.88 (how did they calculate this?) 7.5% Ontario County NYS Taxes
    Acq fee - 595
    Gross Cap cost (Price + taxes + acq fee) - 31598.90
    Cap cost reduction - 3672.86 (I DON'T KNOW WHERE THIS CAME FROM)
    Adj Cap Cost - 27926.04
    Money Factor - 0.00117
    Rent charge - 1896.25
    Monthly payments - 353.64

    Amount due at signing
    Cap cost reduction - 3672.86
    1st payment - 353.64
    Title fee - 85
    Reg/NYS tire fee - 87.50
    Total - 4199 (This is then broken down into 2250 rebate and 1949 actual cash down)
    The 2250 rebate comes from 1500 Kia dealer cash and 750 competitive bonus for Mazda owner

    So all in all it comes close to what I had calculated as what I was expecting
    341.91 payments with the following down
    595 acq fee
    87.50 reg tire
    85 title
    341.91 1st payment
    1091 (tax on rebate and 341.91 monthly payment)
    total down - 2200

    I will post the numbers on the Optima later. Let's just start with the Sorento if someone is able to shed light on this I would be much appreciated.
  • delta737hdelta737h Posts: 626
    edited October 2012

    Your $3672.86 cap reduction is what remains of your $1949 cash down and the $2250 rebate ($4199) after deducting the following charges...

    1st payment - 353.64
    Title fee - 85
    Reg/NYS tire fee - 87.50

    Sales tax in NYS is levied on the total of the taxable payments which includes the $595 acq fee as it is capitalized in the lease. In your case, your taxable payment amounts to $317.95. So, your total payment tax liability amounts to 36 x 317.95 x 0.075/(1 - 0.075) or $928.07. Remember that you're capitalizing the sales tax. In addition, tax is levied on the $3,672.86 cap reduction which amounts to 0.075 x $3,672.86 or $275.46.

    So far, your tax liability amounts to $928.07 + $275.46 or $1,203.53. Somewhere, your dealer managed to find an additional tax of $29.35 (i.e., $1,203.53 + $29.35 = $1,232.88) which reflects an additional taxable amount of $29.35/0.075 = $391.33. Given the information provided, I have no idea where this came from and so, in order to make an intelligent assessment, I would need to see your lease agreement or, better yet, the dealer's lease worksheet as something is definitely missing. My suggestion to you is to ask the dealer for their Lease Worksheet. Every dealer must submit a copy of this worksheet to the fund provider.

    For a detailed description of how consumer retail leases are taxed in NYS, I suggest visiting the following website...

    There you will find a comprehensive article detailing the sales tax treatment given to leases in NYS. Except for taxes, which remain questionable, all other numbers are correct.


  • bsyahbsyah Posts: 11

    Thanks for all that info. I will have to go over it a few times to make sure I understand. I had asked to pay taxes and all fees and not put down any down payment (cap cost reduction) other than paying all taxes and fees. That is why I dont get where the Cap cost reduction number came from. I see how it comes from the down payment and rebate minus fees but how did they calculate the down payment? Seems like a chicken or the egg thing.

    Based on what you have said I would have expected to pay 928 + fees. Also does the acq fee have to be capitialized or could it be paid upfront with taxes?

  • bsyahbsyah Posts: 11
    I guess I had that incorrect. The 928 was based on having CCR of 3672.86. If I actually had no CCR excpet the 2250 dealer rebate (that can be considered CCR right?) then I should have a taxable payment of 359.14? which would be 1048 according your formula? But then my up front payment should have been 1048+85+87.5+359.14 = 1579.64.

    Why is the tax calculated by multiplying by .075 and then dividing by 1-.075?

    Thanks again for the information on this.
  • delta737hdelta737h Posts: 626
    edited October 2012

    You asked...

    "Why is the tax calculated by multiplying by .075 and then dividing by 1-.075?"

    If you are rolling (i.e., capitalizing) New York sales tax into your lease, you are paying sales tax on sales tax. As far as I know, the constitutionality of this has never been challenged. In fact, I'm guessing that few New Yorkers realize that sales tax is being levied on sales tax in such instances. Again, you may want to visit the website I suggested above to see exactly how taxes and taxable payments are determined in NYS. It's too long to discuss here.

    Down payment and CCR mean the same thing. In leasing, the term down payment is never used but people use it to mean different things. For instance, they'll often use the term to mean all the up front fees paid in a lease which is incorrect. For example, the acq fee can be paid up front as well as taxes. However, neither of them reflect a down payment. Down payment means cap reduction only.

    Part of or all of the rebate can be used as a CCR. The balance can be used to pay the front end lease charges which was done in your case. I'm not sure why you paid $1,949 cash as part of the CCR. The other part, $3,672.86 - $1,949 or $1,723.86 represents that portion of the $2250 rebate that was used as a CCR. The balance of the rebate, $2,250.00 - $1,723.86 or $526.14 was used to pay the following front end charges...

    1st payment - 353.64
    Title fee - 85
    Reg/NYS tire fee - 87.50

    And so, a portion of the $2250 rebate was used as a CCR and the other portion was used to pay the front end lease charges. Am I making sense?

    Your lease payment was calculated as follows...

    0.00117x (29771.02+595+1232.88-3672.86+17091.25)+(29771.02+595+1232.88-3672.86-17091.25) x 1/36 = 353.64

    Hope this helps.

  • bsyahbsyah Posts: 11
    Yeah the spreadsheet I put together for calculating this stuff off of the different input numbers jibes but what I did not understand was why I had any CCR at all. Did acq fee or taxes have to be capitalized and then partially taken back out with CCR money? Seems like the straightforward way would have been to capitalize nothing and then apply the rebate towards tax and fees and then pay whatever remained. But I did not know if taxes had to be paid on the rebate.

  • delta737hdelta737h Posts: 626
    edited October 2012
    That's the way the dealer decided to do it. You gave them $1,949 in cash plus a $2,250 rebate. So, the dealer decided to allocate that money to pay the up front charges and the amount remaining was used as a CCR. You probably could have controlled that deal by creating a one-page lease proposal stipulating how the $2,250 rebate was to be allocated. Because you didn't do that, the dealer took it upon themselves to allocate thoses dollars in the manner described. Remember, they have a total of $4,199 to play with. The acq fee and taxes were capitalized in the lease but could have been paid upfront. Personally, I would have paid them upfront ($595 + $1218 + 407 + 85 + 87.50) and would have written a check for the balance owed (about $142) instead of giving them $1,949. Now, that would have given me a payment of $407 but I would not have parted with all that upfront CCR. Money down on a vehicle is not a good idea as it is a depreciating asset. If you total the vehicle, you necessarily risk losing all or part of the CCR.

    Again, I'm not sure why you gave them $1,949 especially if you knew that you were entitled to a $2,250 rebate.

    I've reconciled all the numbers except I can't account for the $29.35 of additional tax without seeing the dealer's worksheet.

  • bsyahbsyah Posts: 11
    I wanted to do it basically the way you suggest but had only been researching lease structure for about a week and needed to get 2 cars quickly because my wife's engine had died in her previous car.

    Unfortunately I was having a hard time finding out how taxes needed to be calculated and what did or did not have to be capitalized. It sounds like what you are saying is that nothing has to be capitalized if you don't want to except the negotiated price of the car.

    I gave them 1,949 because that is what they told me the money needed for taxes and fees was and based on my calculations I felt the combo of the payments and cash was in the range of what made sense based on my calculations coming in. Now after the fact I am just trying to reconcile the numbers exactly (I know reconciling before signing would have been the way to go) so I can be in a better position to do this next time.

    I have a question about your upfront numbers. With no cap adjustment (ie adj cap cost = base cap cost 29771.02) I get the 407.04 monthly but how do you arrive at the 1218 tax? is it based solely on the payments or is the incentive taxed?

    Thanks for the help on this.
  • delta737hdelta737h Posts: 626
    edited October 2012
    Actually, I did the tax calc on the fly. The tax amount should be...

    0.075 x (407.04 x 36 + 595) = 1143.63

    Yup, the acq fee is taxable. However, there may be other taxable items that I haven't considered such as title/reg/tire fees and incentives. Don't know if these are taxable or not in NYS. Generally, manufacturer rebates/incentives are taxable. However, dealer discounts are not taxable in most if not all states. If the $2,250 rebate is taxable, add another $168.75 for a total of $1,312.38. The question I would ask the dealer is whether or not there are any manadates as to how that rebate is to be used. Can the dealer simply write a check to the lessee for $2,250? Or, must the rebate be used to fund the lease?

    As you know, the selling price of the car has nothing to do with whether you capitalize items or not. You don't have to capitalize anything in a lease, except selling price of course. Two identities follow...

    Negotiated Sell price + Capitalized Amounts = Gross Cap

    Gross Cap - CCR = Adj. Cap.

    As you can see, sell price and capitalized amounts are only used to determine the gross cap; one has nothing to do with the other. If there are no capped items, then sell price = gross cap.

  • lazo23lazo23 Posts: 4
    edited November 2012
    Hello kirstie_h!
    The following is for a 2013 Acura MDX w/ Tech Package
    Just left the dealership and for the sake of sleeping well, would like to know if the deal I got was a good one... Every lease calculator i tried says it's an excellent one but I'm a bit pessimistic! Please help! You think you have it all under control but yet they find a way to get you! I tried to perpetuate the situation by continually asking for numbers but they like to be vague and quick to walk away! Took a lot of back and forth w/ the sales rep going to the Finance guy - annoying. Keep in mind I like to have low monthly payments even if it means putting a bit more down in the beginning though I've noticed not to many are into that. I'll write the final deal at the end;

    MSRP - 47890
    Cap Cost - 42321 (negotiated price only)
    Residual value - 26317
    Bank Money Factor - .0012 or 2.9 APR'
    Lease Term - 36/mo 10K miles

    I also had a 2010 TL w/ Tech w/ 4 payments left totaling $1796 I wanted to trade in.

    End of day, I walked out w/ 5K down and $465 per month inclusive of tax, first month payment, dmv and other misc fees.

    Also, in NY w/ a tax rate of 8.875%

  • Kirstie_HKirstie_H Posts: 11,101
    Hello to you!
    I'm not a leasing expert - I just moderate the forums. Hopefully one of our knowledgeable members will drop by and let you know how you did.


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

    Share your vehicle reviews

  • brooklynaudibrooklynaudi Posts: 49
    edited December 2012
    This is probably going to make no sense, but this is the deal I'm trying to work

    MSRP $30095
    NEG PRICE $28402
    NY TAX 8.75%
    DMV FEES $430.27
    RESIDUAL 18057
    MF .00024

    Should come to $299 a month with a $1,000 down. Now since the first months payment is included in the $1,000 in reality I'm only putting $700 towards my cap cost correct? So if I am techincally only putting $700 towards the cap cost then the monthly price would go up by $9 making a grand total of $308 per month...right?
  • qbrozenqbrozen Posts: 28,124
    I don't know how many months you are talking about, but what about the acquisition and DMV fees? Sounds to me like, with $1k due at signing, you aren't applying anything to the car itself. If paying first month up front, you are actually adding several hundred bucks to your cap cost, no?

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

  • brooklynaudibrooklynaudi Posts: 49
    edited December 2012
    Ok now I'm officially lost. It's 36 months, 12,000 miles. If I put all those numbers in the lease calculator (including $1,000 down) I get

    Total Loan Amount $28,427
    Monthly Payment (tax included) $299

    I thought that the DMV fees and the first month had to be paid up front? I would need to put down at least $700 to pay those off to drive off. If I rolled those in wouldn't my monthly payment go up? Or are you saying I should negotiate the price of the car lower?
  • Ok I see what your saying. The final neg. price would be $28402. You would have to add DMV ($450) and ACQUISITION ($595) fee to this which would make the cap cost $29,427.

    I want to pay first month, DMV fees which is $730 and add the $280 as a cap reduction totaling $1000 down. I'm doing this to get my payment to be $300, I don't want to go much higher then that.

    That's what I'm asking though I want to put $1,000 down, the first month is going to have to come out of that or they are going to roll it into the payments so technically I'm only putting $700 down right? Which means at that negotiated price, my monthly is going to go up by $9 correct?
  • qbrozenqbrozen Posts: 28,124
    edited December 2012
    Well, I THINK you could tack the first month onto the end. I could be wrong. So, in other words, instead of first month up front and 35 payments, you actually make 36 payments, starting 30 days after you get into the car. Again, I could be totally off base here, but worth looking into.

    In any case, yes, $300 additional cap cost should be roughly $9.

    I haven't run your numbers through a lease calculator, but don't forget tax on the monthly payment.

    edit: oK, ran it through calculator. Looks like you are right on the money. It is still telling me, however, that you should be at $300/mo with tax after just $1k down. That's probably calculating like I did above, that you would make 36 payments, not the first payment up front.

    Heckuva deal on a $30k car.

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

  • Ok great, thanks for the help, much appreciated.
  • Getting close to leasing a car, but every calculator / formula I use produces different results... so I figured I'd just ask.

    I've tried about 5 different ones, as well as creating my own based on formulas found here, on bankrate, and one or two others.... all end up different.

    So - if anyone can point me to a true formula, that'll really help!

  • kyfdxkyfdx Posts: 167,259
    It's pretty much a straight math formula... Check out Post #1 in this discussion for specifics...

    I do it on a spreadsheet that my then 12-yr-old son made for me... :)

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

    Edmunds Moderator

  • Thanks Kirstie -

    Well... that's the one I used just before posting!

    FWIW that gave me a monthly (including taxes) of 356.92; Edmunds gave me a monthly including taxes of 282.51. Obviously a pretty significant difference!

    Numbers are 29,625 msrp, 27,625 cap cost, 36 months, .6 res value, .0016.

    I'm sure I'm messed something up... not sure what it is though!

  • kyfdxkyfdx Posts: 167,259
    That's $346.25, pre-tax...

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

    Edmunds Moderator

  • Ok - mind giving me a hint at how you got to that number? :)

  • qbrozenqbrozen Posts: 28,124
    what are you entering into edmunds' calculator?
    I entered what you listed above, excluded acquisition and DMV since you didn't list any, used 17775 as the residual, and assumed 7% tax. It spits out $382/mo for 36 mos.

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

  • bluechunksbluechunks Posts: 12
    edited December 2012
    Hi again -
    27,625 cap cost, 36 months, .6 res value (17775 based on MSRP) (I see Edmunds doesn't provide for entering MSRP?), .0016 money factor with 2,000 down. I get $338, tax included!

  • Kirstie_HKirstie_H Posts: 11,101
    That was kyfdx who responded rather than me, but I'm always happy to take credit for others' work. :)


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  • Oops -

    Well, then... thanks for the awesome pie we had on Saturday, too! :)
  • kyfdxkyfdx Posts: 167,259
    You added $600 title/registration, and didn't mention the $2000 downpayment... (or, Edmunds calculator did...)

    I did a straight calculation, based on the parameters you gave me...

    Cap cost - residual = depreciation which is then divided by the lease term in months..

    (Cap cost + residual) X money factor = monthly finance charge.

    Monthly depreciation + monthly finance charge = lease payment.

    Taxes vary depending on state and rate..

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

    Edmunds Moderator

  • qbrozenqbrozen Posts: 28,124
    $2k down makes a huge difference, obviously. About $60/mo.

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

  • steverstever Posts: 52,462
    A reporter would like to speak to someone who is going to be in the market for a new car in the next few months because their lease is expiring. If you fit this description, please email your daytime contact info to [email protected] by Friday, January 25, 2013 at noon PT/3 p.m. ET.
  • I was given a quote for a '13 Acadia Denali of $575 w/tax in NJ but after further research I am questioning the deal. I called the dealer and seem to be getting a lot of double talk so I want to confirm my calculations to make sure I have a leg to stand on. Thanks in advance...

    Here's the deal:

    MSRP $48795
    Base Cap Cost $47564
    Rebates $4000
    Additional Fees (Acq, Title, etc) $1521
    Residual (57%) $27813
    Money Factor .00077
    Term 39 months
    sales Tax 7%

    Monthly Payment $500 plus tax--NOT SURE WHAT PROPER AMOUNT IS ($34??)

    The dealer claims they can't get to my number but are not disputing the money factor or residual. They keep talking about the sales tax but don't seem to be making sense to me. Even if sales tax is $34 month I'm still only at $534 not $575. In NJ, is sales tax paid by the lessee on the vehicle upfront? I didn't think it was but maybe I'm wrong and need to add additional money to cost of the vehicle???
  • delta737hdelta737h Posts: 626

    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
  • 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

    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: 626
    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.

  • delta737hdelta737h Posts: 626
    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.

  • 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: 28,124
    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.

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

  • 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
  • qbrozenqbrozen Posts: 28,124
    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:

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

  • delta737hdelta737h Posts: 626
    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...

    Questions? Please let me know.


    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.
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