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How to Calculate Monthly Lease Payments



  • Kirstie_HKirstie_H Posts: 11,081
    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.


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  • 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: 25,217
    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?

    '18 BMW 330xi; '67 Coronet R/T; '14 Town&Country Limited; '18 BMW X2. 47-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: 25,217
    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.

    '18 BMW 330xi; '67 Coronet R/T; '14 Town&Country Limited; '18 BMW X2. 47-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: 107,487
    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: 107,487
    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: 25,217
    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.

    '18 BMW 330xi; '67 Coronet R/T; '14 Town&Country Limited; '18 BMW X2. 47-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: 11,081
    That was kyfdx who responded rather than me, but I'm always happy to take credit for others' work. :)


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

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  • Oops -

    Well, then... thanks for the awesome pie we had on Saturday, too! :)
  • kyfdxkyfdx Posts: 107,487
    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: 25,217
    $2k down makes a huge difference, obviously. About $60/mo.

    '18 BMW 330xi; '67 Coronet R/T; '14 Town&Country Limited; '18 BMW X2. 47-car history and counting!

  • steverstever Posts: 52,683
    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: 617

    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: 617
    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: 617
    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: 25,217
    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.

    '18 BMW 330xi; '67 Coronet R/T; '14 Town&Country Limited; '18 BMW X2. 47-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: 25,217
    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:

    '18 BMW 330xi; '67 Coronet R/T; '14 Town&Country Limited; '18 BMW X2. 47-car history and counting!

  • delta737hdelta737h Posts: 617
    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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