Need help with understanding my lease agreement

neopho

I leased my first car several weeks ago, and always felt the payment I am making is not perfectly right. So I studied my GM Financial lease agreement again. In the part showing how the payment is determined, I am very confused with the following item:

A. Gross capitalized cost. The agreed upon value of the Vehicle ($29411.58) and any items you pay over the Lease term (such as service contracts, insurance, and any outstanding prior credit or lease balance).

And at the end of line, it shows $30855.55

All following computations were than based on $30855.55

However, as shown on the window sticker, the MSRP was only $30575.00.
Since I have not bought any contracts or insurance from the dealership, neither did I have any lease balance, shouldn't the number be the agreed upon value ($29411.58)?

Did the dealer made a "mistake" here? Or am I missing something?

Thanks a lot for your help in advance!

kyfdx

neopho said:

I leased my first car several weeks ago, and always felt the payment I am making is not perfectly right. So I studied my GM Financial lease agreement again. In the part showing how the payment is determined, I am very confused with the following item:

A. Gross capitalized cost. The agreed upon value of the Vehicle ($29411.58) and any items you pay over the Lease term (such as service contracts, insurance, and any outstanding prior credit or lease balance).

And at the end of line, it shows $30855.55

All following computations were than based on $30855.55

However, as shown on the window sticker, the MSRP was only $30575.00.
Since I have not bought any contracts or insurance from the dealership, neither did I have any lease balance, shouldn't the number be the agreed upon value ($29411.58)?

Did the dealer made a "mistake" here? Or am I missing something?

Thanks a lot for your help in advance!

The only thing the MSRP is used for is determining the residual amount. (MSRP X residual percentage).

Agreed upon value is the sales price. Your lease agreement should show the amounts that were added to the sales price to come up with the Gross Cap cost. You say the Gross CAP cost is at the end of the line, but what are the numbers between the two numbers? Acquisition fee is likely one of them.

kyfdx

neopho said:

Thanks. The state is NJ and the rate is 7%. I had everything rolled into the cap and only paid for the gov fee as the initial payment.

NJ calculates tax on the total payments, plus any taxable amount paid upfront (like acquisition fee or dealer fees or cap cost reduction). That's why you should pay government fees upfront. They are non-taxable, but if you roll them into the payment, they become taxable.

The sales tax is paid upfront by the lender. You can pay it upfront, or roll it into the payment. You don't have to worry about being taxed twice, because the payment is calculated and taxed, before rolling it in, if that's the way you go (and, I would).

neopho

Thanks, kyfdx. You were right.

I just looked again and found there is actually a section of Itemization of gross cap cost, and it shows what were actually added to the agreed upon price. Turns out the acq fee and the tax were added here.

If you don't mind, can you also tell me how to calculate the tax, i.e. what is usually taxed? Thanks.

kyfdx

neopho said:

Thanks, kyfdx. You were right.

I just looked again and found there is actually a section of Itemization of gross cap cost, and it shows what were actually added to the agreed upon price. Turns out the acq fee and the tax were added here.

If you don't mind, can you also tell me how to calculate the tax, i.e. what is usually taxed? Thanks.

Sure. if you tell me which state and the tax rate..

neopho

Thanks. The state is NJ and the rate is 7%. I had everything rolled into the cap and only paid for the gov fee as the initial payment.

neopho

Thanks, kyfdx. That helps a lot. I made the calculation again and result is actually about $10 more than what's in the agreement. But it's significantly closer than what I had. Thanks!