Did I get a good deal? I put $2577 down, traded in my leased 05 Honda Accord early, lease was supposed to end March 08. Was $1,800 in the negative on the Accord so they added that into my payment and tax as well and the payments came to $447 a month. What do you think?
I went to Clinton Honda in NJ on Saturday. Looking at the EX-L 4WD no NAV and no RES. The money factor is now 0.00300 and residual is 50%. The offer price (made by them) was $27,696.31 which is $3000 below invoice. This works out to be $469/month lease for 15k per year and no money down other than inception which is basically $1500.
They only had 24 Pilots on the entire lot and dealerships aren't getting in anymore so once their 2007 inventory runs out, that's it. By the way, that same lease above for the 2008 model would be well over $500/month. If you want a 2007 Pilot, don't wait unless your dealership has a lot of inventory. My 2 cents.
Just finalized our lease and picked up the new car. 36 months at 15k miles per year for $450/month. Up front money was $1500 for inception and that included: - $450 first month's payment - $197 doc fee - $7.50 tire fee - $259.50 title fee - $595 bank fee
$26939.47 was the price 0.00300 MF 50% residual
They threw in window etching and wheel locks.
Clinton Honda in NJ...highly recommended. Feel free to email me for salesman info.
I received a purchase price quote on a 4WD EX-L w/ Navi of $29,210 (not incl TTL). When I asked about leasing it he gave me lease numbers for an '08 saying the numbers were better.
I persisted and asked about leasing the '07. Was told that the price on the '07 to lease it would be $32,450. Never had someone give me a different price for a lease vs. purchase. Anyone else experience this.
For what its worth here are the quotes I got for each of the ’07 and ’08. Each are 12,000 per year with only first payment and license plate fee due at signing:
Hi Jeff. If you know a dealer is not giving you the best possible money factor on the vehicle that you want to lease, they will usually cave in and give it to you if you threaten to lease from a different dealer who will give it to you. If your threat doesn't work, just shop around.
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Hey tjta1. Honda's lease program is different in July than it was in June. Last month, a couple hundred dollars over dealer invoice was a very good capitalized cost for this truck. In July, Honda replaced the special money factor that it was offering on the Pilot with $3,500 dealer cash. So on a lease of this truck now, you should shoot for a cap cost of $3,000 or so under invoice.
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Hi bragot. The dealer invoice price for a 2007 Honda Pilot EX-L without the entertainment or navigation systems is $29,522. The selling price that you were quoted for this truck was excellent for a lease of it in June. For July, Honda replaced this truck's special lease money factor with $3,500 dealer cash. So if you haven't finalized this deal yet, shoot for a selling price that's $3,500 lower. Honda Finance's new buy rate lease money factor for the '07 Pilot is .00290 for consumers who qualify for its "Super Preferred" credit tier and pay a security deposit at lease signing.
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Hi jstewie23. Through September 4th, Honda Finance's buy rate lease money factor and residual value for a 36 month lease of a 2007 Honda Pilot E-L 4WD without navigation or entertainment are .00290 and 50%, respectively. The residual value for a lease with only 12,000 miles per year would be 2% higher. When negotiating your lease of this truck, make sure to use the $3,500 dealer cash that is currently available on it.
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Hi jstewie23. For July, Honda replaced its special lease program on the Pilot with $3,500 dealer cash. Use this cash to negotiate a selling price that it well below dealer invoice and then have the dealer use Honda Finance's buy rate lease money factor of .00290 to calculate your monthly payment.
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Hey Dan. Honda Finance's current buy rate lease money factor and residual value for a 36 month lease of a 2007 Honda Pilot EX-L 2WD without the entertainment or navigation options with 12,000 miles per year are .00290 and 48%, respectively for consumers who qualify for its "Super Preferred" credit tier and pay a security deposit at lease signing. The money factor for an otherwise identical lease of a 4WD model would be the same, but its residual value would be 52%. When negotiating your lease on this truck, make sure to take advantage of the $3,500 dealer cash that Honda is currently providing on it.
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Car_man, I'm being told by the dealer that they will not include the $3500 dealer cash in the deal if I lease, only if I buy it. Giving me a $28,995 purchase price on a EX-L 4WD w/ Navi, but telling me that the Cap Cost on the lease would be $32,450. Right now its a deal killer. You hearing if other dealers are doing the same thing???
That is the "story" I was told regarding the $3500 on the Ridgeline as well (I asked when we were leasing our new Odyssey this past Saturday. Does that make it 100% true? - No. I think it really boils down to whether Honda is subventing, ie subsidizing, the lease rates for the Pilot. If they are, then it probably is true.
I got quotes from probably 4 or 5 dealers in N.E. Ohio (Cleveland). All were within about $500 of each other with the $28,995 being the best of the bunch. Same dealer even sent me an additional e-mail coupon for $500 off. Haven't pulled the trigger on a deal yet, so I'm a little hesitant to spill it all until I do. SOrry.
Fact is I'm still wavering btwn the Pilot and the Pathfinder. Left side of the brain (the logical side) says Pilot - its more reliable, better value, roundly well reviewed..... Right side of the brain (the emotional/visual side) says Pathfinder - more visually appealing, better creature features.....
May have a line on a killer deal on a Pathfinder, but I only trust the dealer so much, so I'll beleive it when the car shows up on the lot tomorrow.
Super Preferred: .0029 Preferred: .0032 Standard: .0039
Finance Department is also adding (or trying to) .0001
Acq Fee: $595
Dealers CAN and WILL take the $3600 Man-to-Dealer Cash off the Invoice. I offered $26800 (Edmund's TMV was $26744 on July 31 night and moved to $26640 when I got to the dealer the next day. Pulled it up right in front of the salesman.)
Hi Car_man, Please let me know the current buy rate lease money factor and residual value for a 2007/8 Pilot SE 4WD with 36k miles/36month lease. Thanks a lot!
Hi Car_man, Please let me know the current buy rate lease money factor and residual value for a 2007/8 Pilot EX/VP 4WD with 36k miles/36month lease in NY. I'm trying to sign & drive this weekend. Thanks a lot!
Hey, I know they say residuals are fixed by honda finance (if going through them), but can the dealer change them? And does anyone know residual for August on a '07 Pilot EX-L Navigation, 36K, 36 miles? I went to dealer today and got a lower figure than expected (51%).
Can someone explain the money factor and residual numbers I see posted here? I may want to lease a 2007 Pilot EX-L, and want to negotiate the lowest monthly payment possible, with no or little money down...... (36K, 3 years). I am looking at S.Jersey-Phila area dealers. Thanks, Bob
Hello Car_man. Can you respond to my lease questions in the last post (#1206). I'm afraid I am not well versed in lease terminology, and want to go into the dealerships informed. Thanks, Bob
Depreciation = Negotiated price - Residual Value Residual Value= MSRP * Residual % Inception payment = Lease monthly payment (first)+ Fees + Tag and title + security deposit
The MSRP is public. The key is to find the Residual % and the Money factor (or lease rate) for the car you want at the lease term you want (24 or 36 months, 12K miles or 15K miles a year)...
Thanks for your response. Unfortunatley, I am more confused now! What is going on NOW with Honda as far as leases on the Pilot 07 or 08? Anyone negoitate a good lease? Bob
The money factor is the interest rate that is used to help determine the monthly payment the same way an interest rate is used to determine your mortgage payment or a regular loan payment.
In leasing you're only financing a portion of the cars total value so let's say the car is $30k, and you're leasing it for 36 months; you're paying the difference between $30k and the residual value (what the car is worth when you return it) plus interest (and maybe tax and other fees that are rolled into the payment).
So let's say that at the end of 3 years with only 36k miles the car's residual value is $16,500 (that's 55% of $30k), you are only financing $13,500 of the cars value plus the money factor(interest rate).
May be the below formula helps you see how a monthly payment is calculated:
1. Determine Residual Value
MSRP x Residual %
2. Calculate depreciation (which will be the amount of the car you use)
Negotiated Price - Residual value
3. Divide depreciation value by the term (ie 36 months). This gives you your base monthly payment.
Depreciation/term
4. Calculate interest payment
(Negotiated Price + Residual Value)x Money Factor
5. Calculate tax payment
Monthly payment x Tax rate
Hope this helps.
If I've missed anything, someone else please jump in.
Mathematically, a money factor isn't an interest rate. In fact, it's not even a rate. It's a pure number (unitless number). Your formula is almost correct. Just replace Negotiated Price with Adjusted Capitalized Cost....
Base Payment = MF x (AC + RV) + (AC - RV)/Term (months)
where:
MF = Money Factor AC = adjusted cap RV = Residual Value
Negotiated Price is really the Agreed Upon Value in terms of the FRBB's Reg. M Disclosures and so...
Agreed Upon Value + Amounts Financed = Gross Cap Cost
Gross Cap - Cap Reductions = Adj. Cap.
Also, dealer add-ons are seldom fully residualized because fund providers and their residual insurance carriers know that dealers inflate prices. So, for example, a dealer installed moon roof retailing for $1800 might be limited to, say, only $1200. A vehicle with an MSRP of $30,000 before adds would have an adjusted MSRP of $31,200 after the moon roof is installed. Adjusted MSRP includes residualized dealer installed options and excludes discounts. Therefore, technicaly speaking, the RV is computed as follows...
Sign and drive means no upfront costs implying that the first payment is rolled (i.e., capitalized) into the lease. The formula still applies whether it's a sign and drive or not. I have written a paper that addresses the issue of capitalizing the first payment. If you're interested, I'll be glad to send you a copy.
Notice, that the adjusted cap includes any amounts financed (acq. fee, sec. dep., taxes, 1st. payment, negative equity, doc fees, etc) which may or may not include a capitalized first payment. Of course, one can always elect not to finance these amounts and pay them directly out of pocket at lease inception.
If you're interested in a sign and drive lease where you're capitalizing the 1st payment, consider my lease proposal that was actually originated in Ohio not long ago...
2007 Acura TSX Retail Pricing Information
Base MSRP 2007Acura TSX 5 Speed Automatic (CL9687JW) . 28,090.00 Premium Pearl White . . 0.00 Destination Charge . . 670.00 MSRP .. . ... 28,760.00
Because we're financing sales tax, the 361.71 payment will necessarily include sales tax. Ohio computes sales tax on the sum of the monthly payments that reflect only taxable items and is, therefore, based on a payment of $329.77 in this scenario. You can't even begin to imagine the number of Ohio dealers that can't calculate sign and drive leases correctly... it's incredible! In Ohio, it is absolutely essential that those considering a sign and drive lease be experts in the mathematics of leasing; otherwise, they place themselves at the mercy of incompetent dealers. In fact, the Acura Dealer had absolutely no clue what I was doing and I wasn't about to educate them either. I reward only competent people with my business. So now, I drive a Honda Pilot that I purchased.
Technically, though, the above is not a sign and drive because I elected not to finance the License, Title, Registration Fees. I always pay those out of pocket because this charge is dependent upon the actual delivery date.
I just leased a 2008 pilot VP from Honda of New Rochelle, NY: $415/m, 42 month / 42K miles $220 paid for DMV fees + 415 first month = 635 due at signing. The sales is Duane Reade. Is it a good deal??? :confuse:
Tried to lease an '07 last week but was told by 2 dealers (Rockland County, NY) that there was "one left" and it was beige with DVD. At both dealers (Mahwah and Nanuet) I e-mailed them for quotes and was quoted a no money down 36K mi, 36mo lease w/NY taxes in the payment for around $440/mo. from both dealerships. When I called them on it, I was told by both dealers that the quote was only for a non-DVD pilot and the one dvd pilot they had left was going to be around $520/mo. I then tried to lease an '08 and was given prices in the $550 - $560 range. C'mon people, this is a Honda. My Audi costs less. Obviously this is not a good time to lease a Honda (money factor was .003). Does anyone know what will happen to the money factor in September? Hopefully it will go back down to .00029 or so. I was also told the "All new" 2009 Pilot will be released in February or March of '08.
I'm returning my lease tomorrow while planning to lease a 07 Pilot EX-L w/o Nav or RES and I'm sorry but I still have many questions:
- Do you know if the $3500 dealer cash and the 0.0029 money factor from July still on?
- Is this 0.0029 money factor for a 24 or 36 month lease?
I also would really appreciate your help with the residuals on a 24 months and 36 months (15Kmiles/year) lease.
What surprises me is to read that Honda Finance is currently asking for a security deposit to consumers who qualify for its "Super Preferred" credit tier. It’s that true? Any idea what that security deposit could be?
I'm new leasing and totally ignorant of all the ins and outs of it. I live in Providence, RI and would like to lease by next week an AWD Honda Pilot, 07 or 08.
1. Does anyone have any advice or info about good deals in this area?
2. what should my monthly payments be - i don't need any extra options
Two dealers are telling me the residual for a 2007 Pilot EX-L FWD in a 36 month /15K miles a year lease is 46% (MSRP = 32540 ; Residual value 14968). Too low for a Honda I would say.
We lease an 2007 2WD EX-L Pilot with DVD in Ohio, but we live in NJ. The lease is through Huntington Bank, not Honda.
They said they called NJ and figured out how to do the tax. So our signed contract has the tax listed in the monthly payment.
NOW they called saying they did it wrong and sent a new contract priority mail for us to sign and return asap, which makes me very leary.
The payment stays the same and it looks, legite, but I want to make sure I'm not missing anything. We have the car.
Here's the numbers: 48 month lease Agreed upon value: 27207.00 (New contract 27027.18- $200 difference)
Amount due at signing 1325.00 (all fees same)
Monthly payment: 460.50 including 30.03 monthy tax same payment on new contract, but monthly tax 0 and a lump some of 1427.06 upfront sales tax added to gross capitalized cost.
Residual same at 13654.00
(Gap insurance $600 includied in Gross cap. cost - I elected to have this - good idea?)
Am I missing anything? Please advise - my tags expire on August 30th...
I'll take your last concern first because it was screaming for attention. A $600 GAP insurance fee???????????? WOW!!!!! I would check with your insurance carier and see if they can add a GAP rider to your existing car insurance policy. As a rule of thumb, GAP coverage should cost around 0.1% of the MSRP annually. So, if the vehicle's MSRP is $30,000, then GAP coverage should cost somewhere in the neighborhood of 0.001 x $30,000 = $30 annually.
Your first concern centers on NJ sales tax. Why is there a new contract? Did you live in Ohio when you leased the '07? If you did not reside in Ohio, then why are you paying Ohio sales tax? I believe Huntington Bank's charter allows them to do business in NJ and so your car would be titled in NJ. Therefore, it seems to me that you wouldn't pay Ohio sales tax if, in fact, you weren't living in Ohio at the time you leased the car.
NJ computes its sales on the agreed upon value of the vehicle and is payable upfront. For instance, if your car is valued at $20,000 and the sales tax rate is 7%, then your upfront sales tax liability is 0.07 x $20,000 = $1,400.00.
In Ohio, sales tax is levied on the total of all taxable payments. The tax is payable upfront but the sales tax can be rolled (i.e., capitalized) in the lease. If Ohio charged you sales tax, my guess is that you rolled the sales tax into the lease where the tax component of your payment amounts to $30.03. The tax would NOT be added to the gross cap cost. The tax would be added to the Agreed Upon Value...
Agreed Upon Value + Capitalized (financed) Amounts = Gross Cap.
I'm not sure why $200 was deducted from the agreed upon value other than it may be some non-taxable fee.
It's interesting to note that when a 7% sales tax is levied on $27,027, one gets $1,891.89 not $1427.06 (a $464.83 deficit). Unless the sales tax rate and/or agreed upon value is incorrect, it appears as though NJ has credited you with the present value of the remaining $30.03 Ohio tax payments. However, even that's puzzling because you most likely have at least 36 payments remaining and the present value of 36 payments of $30.03 will be far greater than $464.83. On the other hand, if the $30.03 really reflects NJ tax, then it's plausible that the present value of 48 such payments would equate to $1,427.06 provided that your money factor was extremely low.
As you can surmise, I have lots of questions. Something is missing.
I can tell you that mistakes are often made. The only way for me to help you is I would need to examine both lease contracts. I simply have too many questions. If you're interested, send me an email. Otherwise, I would get some clarification from the Ohio and NJ Dept. of Revenue. I would want to know why $200 was deducted and how the $1,427.06 sales tax was computed as well as where and how the $30.03 originated. Is the $30.03 Ohio or NJ tax?
No offense intended, but your post is somewhat confusing.
The dealer and the bank are in Ohio. The purchaser lives in New Jersey. New Jersey does tax upfront, but not on the entire purchase price. It is either depreciation or total payments. The tax looks about right.
I don't know how you are reading this, but it looks to me like they just leased the van this month.. There is no Ohio tax involved.
The variance is between how the bank assumed tax was calculated vs. how it actually was calculated. If the tax was figured incorrectly, then they have to re-do the contract. It seems they actually had to drop the selling price to get the same payment. I think that's why the selling price was reduced by $200.
The GAP insurance seems pricy to me, also, but it seems that was agreed to beforehand. It's hard to go back and re-visit your negotiations after the fact. It seems the only issue was a mis-calculation of NJ tax.
"New Jersey does tax upfront, but not on the entire purchase price. It is either depreciation or total payments."
Well, which is it? I spoke with a NJ sales tax representative and they claim that tax is levied on the agreed upon value. If the NJ sales tax rate is 7%, then tax on the depreciation would amount to $936.12 (i.e., 0.07 x (27027.18 - $13,654). Yet, her tax amounted to $1,427.06. It may very well be that it could be on the total payments assuming the money factor was very very low (below zero if the $30.03 includes tax plus finance charge on the tax). This isn't at all plausible.
Some states levy tax on total payments (e.g., Ohio) and a few others levy it depreciation. Most, however, levy taxes on the payment streams. I refuse to look any state's on-line documentation as it may be outdated. The other problem is that many of these government workers are incompetent. So, I'm not sure what the answer is. The best approach is to examine current documentation or the documentation that was in effect at the time the vehicle was leased.
I know that payments and taxes are incorrectly calculated by many fund providers particularly when the first payment is capitalized. Whether or not amy capitalized the first payment is not known. I've already spoken to one software developer about the problem and they have agreed but have not amended their software yet.
"The GAP insurance seems pricy to me, also, but it seems that was agreed to beforehand."
Although this may be a reasonable assumption, I'm not clear as to whether it was or has been agreed to.
And so, I would need to examine all of amy's documentation before making any judgements. That's the safe thing to do instead of guessing or saying "well it looks like this or that".
NJ collects their tax upfront on a lease.. and, not on the selling price of the vehicle.. It used to be on depreciation only, though lately it seems to be the total of payments.
I have this job where I read about leases... sometimes you can glean some information, without calling a NJ sales tax representative.. who still might give you the incorrect information about how NJ taxes a lease.
I understand leases can be complicated, but sometimes the answers are simple. A car dealer and/or a bank in Ohio called New Jersey and got the wrong information on how the tax is calculated. Now that they have the right information, they have to re-do the lease contract, to reflect the correct taxation. Seems pretty simple. If your payment, term, mileage allowance and residual haven't changed, then I don't see the issue?
This is a message board. The participants aren't likely to scan their documents and post them for our perusal. Help is provided, according to the information given. More information may be provided that will clarify the situation. I didn't find the original post all that confusing. I'll stand by all my advice.
Okay. You stand by your advice and I'll stand by mine. "Now they have the right information"? How do you know? I still think you're assuming too much. Although, you do have a very strong case that the tax may be based on the total payments. That seems to be the most logical. Tax based on depreciation just doesn't compute.
I still don't feel comfortable with the information provided. I need to see documentation. Otherwise, there isn't much I can do except guess and guessing doesn't cut it.
car_man...would appreciate any info on the residual and money factor for a 36-month lease with 15,000 miles per year on the 2008 EX-L AWD. Thanks much!
Comments
They only had 24 Pilots on the entire lot and dealerships aren't getting in anymore so once their 2007 inventory runs out, that's it. By the way, that same lease above for the 2008 model would be well over $500/month. If you want a 2007 Pilot, don't wait unless your dealership has a lot of inventory. My 2 cents.
Thanks,
Dan
- $450 first month's payment
- $197 doc fee
- $7.50 tire fee
- $259.50 title fee
- $595 bank fee
$26939.47 was the price
0.00300 MF
50% residual
They threw in window etching and wheel locks.
Clinton Honda in NJ...highly recommended. Feel free to email me for salesman info.
I persisted and asked about leasing the '07. Was told that the price on the '07 to lease it would be $32,450. Never had someone give me a different price for a lease vs. purchase. Anyone else experience this.
For what its worth here are the quotes I got for each of the ’07 and ’08. Each are 12,000 per year with only first payment and license plate fee due at signing:
2007 Honda Pilot EXL 4WD Navi
Monthly Payment: $588
Selling Price: $32,475
Residual: $18,020 (50%)
Money Factor: .00258
2008 Honda Pilot EXL 4WD Navi
Monthly Payment: $578 per month
Selling Price: $33,365
Residual $20,656.80 (57%)
Money Factor .00315
Northern Ohio. Received the quotes this week.
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Thanks
M
I'm being told by the dealer that they will not include the $3500 dealer cash in the deal if I lease, only if I buy it. Giving me a $28,995 purchase price on a EX-L 4WD w/ Navi, but telling me that the Cap Cost on the lease would be $32,450. Right now its a deal killer. You hearing if other dealers are doing the same thing???
Where did you get this price?
thx a lot.
Fact is I'm still wavering btwn the Pilot and the Pathfinder. Left side of the brain (the logical side) says Pilot - its more reliable, better value, roundly well reviewed..... Right side of the brain (the emotional/visual side) says Pathfinder - more visually appealing, better creature features.....
May have a line on a killer deal on a Pathfinder, but I only trust the dealer so much, so I'll beleive it when the car shows up on the lot tomorrow.
I need to know what the M/F and Residual is for Pilot EX-L (w/ rear entertainment package) 4wd, 12k mi/yr, and 36 month lease. Much appreciated!!!
No Nav.
Thank you!
36 months, 15k miles, residual = .53
24 months, 12k miles, residual = .63
24 months, 15k miles, residual = .62
Honda's Lease Rates (36 months):
Super Preferred: .0029
Preferred: .0032
Standard: .0039
Finance Department is also adding (or trying to) .0001
Acq Fee: $595
Dealers CAN and WILL take the $3600 Man-to-Dealer Cash off the Invoice. I offered $26800 (Edmund's TMV was $26744 on July 31 night and moved to $26640 when I got to the dealer the next day. Pulled it up right in front of the salesman.)
They took $26800 with no trouble.
Please let me know the current deals in NY.
Many thanks!
Please let me know the current buy rate lease money factor and residual value for a 2007/8 Pilot SE 4WD with 36k miles/36month lease.
Thanks a lot!
Please let me know the current buy rate lease money factor and residual value for a 2007/8 Pilot EX/VP 4WD with 36k miles/36month lease in NY. I'm trying to sign & drive this weekend.
Thanks a lot!
The end of my lease is approaching and after three happy years I’m planning to lease a Pilot again.
Back on 2004 there was only the 4WD but now we have also the FWD and I’m not really sure how the residual in different models will work.
Could you please help me filling out this table?
=================================================
Residual % for 15K Miles/year
24 Months 36 Months
=================================================
EX-L FWD ?? ??
EX-L FWD w/RES ?? ??
EX-L 4WD ?? ??
EX-L 4WD w/RES ?? ??
=================================================
Thanks in advance
Anzuelo
I'm not the expert but this is basically how I understand it:
Lease monthly payment= Lease monthy payment pretax + tax
Lease monthly payment pretax = Lease cost / months
Lease cost = Depreciation + Rent Charge
Rent Charge = (Negotiated Price + Residual value) * Money factor * Months
Depreciation = Negotiated price - Residual Value
Residual Value= MSRP * Residual %
Inception payment = Lease monthly payment (first)+ Fees + Tag and title + security deposit
The MSRP is public. The key is to find the Residual % and the Money factor (or lease rate) for the car you want at the lease term you want (24 or 36 months, 12K miles or 15K miles a year)...
Hope this will help you
The money factor is the interest rate that is used to help determine the monthly payment the same way an interest rate is used to determine your mortgage payment or a regular loan payment.
In leasing you're only financing a portion of the cars total value so let's say the car is $30k, and you're leasing it for 36 months; you're paying the difference between $30k and the residual value (what the car is worth when you return it) plus interest (and maybe tax and other fees that are rolled into the payment).
So let's say that at the end of 3 years with only 36k miles the car's residual value is $16,500 (that's 55% of $30k), you are only financing $13,500 of the cars value plus the money factor(interest rate).
May be the below formula helps you see how a monthly payment is calculated:
1. Determine Residual Value
MSRP x Residual %
2. Calculate depreciation (which will be the amount of the car you use)
Negotiated Price - Residual value
3. Divide depreciation value by the term (ie 36 months). This gives you your base monthly payment.
Depreciation/term
4. Calculate interest payment
(Negotiated Price + Residual Value)x Money Factor
5. Calculate tax payment
Monthly payment x Tax rate
Hope this helps.
If I've missed anything, someone else please jump in.
Mathematically, a money factor isn't an interest rate. In fact, it's not even a rate. It's a pure number (unitless number). Your formula is almost correct. Just replace Negotiated Price with Adjusted Capitalized Cost....
Base Payment = MF x (AC + RV) + (AC - RV)/Term (months)
where:
MF = Money Factor
AC = adjusted cap
RV = Residual Value
Negotiated Price is really the Agreed Upon Value in terms of the FRBB's Reg. M Disclosures and so...
Agreed Upon Value + Amounts Financed = Gross Cap Cost
Gross Cap - Cap Reductions = Adj. Cap.
Also, dealer add-ons are seldom fully residualized because fund providers and their residual insurance carriers know that dealers inflate prices. So, for example, a dealer installed moon roof retailing for $1800 might be limited to, say, only $1200. A vehicle with an MSRP of $30,000 before adds would have an adjusted MSRP of $31,200 after the moon roof is installed. Adjusted MSRP includes residualized dealer installed options and excludes discounts. Therefore, technicaly speaking, the RV is computed as follows...
RV = Residual Factor x Adjusted MSRP
John
Medina, Ohio
Your calculation is a "sign and drive" one, I mean with ZERO inception payment. Am I right?.
Sign and drive means no upfront costs implying that the first payment is rolled (i.e., capitalized) into the lease. The formula still applies whether it's a sign and drive or not. I have written a paper that addresses the issue of capitalizing the first payment. If you're interested, I'll be glad to send you a copy.
Notice, that the adjusted cap includes any amounts financed (acq. fee, sec. dep., taxes, 1st. payment, negative equity, doc fees, etc) which may or may not include a capitalized first payment. Of course, one can always elect not to finance these amounts and pay them directly out of pocket at lease inception.
If you're interested in a sign and drive lease where you're capitalizing the 1st payment, consider my lease proposal that was actually originated in Ohio not long ago...
2007 Acura TSX
Retail Pricing Information
Base MSRP 2007Acura TSX 5 Speed Automatic (CL9687JW) . 28,090.00
Premium Pearl White . . 0.00
Destination Charge . . 670.00
MSRP .. . ... 28,760.00
Agreed Upon Value . 26,700.00
Amounts Financed
1st Month’s Payment 361.71
Security Deposit .. 375.00
Acquisition Fee 595.00
Sales Tax @6.00% x 35 x $329.77 .. 692.52
Capitalized Costs
Gross Capitalized Cost . 28,724.23
Capitalized Cost Reduction . . 0.00
Adjusted Capitalized Cost 28,724.23
Residual Data
Residual Factor .. . . 0.62
Residual Value (Residual Factor × MSRP) .. . . . 17,831.20
Cost of Money/Term
Money Factor . . . 0.00127
Term (months) . 36
Lease Payment Itemization
Monthly Lease Payment including Sales Tax .. . . . 361.71
Monthly Lease Payment excluding Sales Tax .. .. 340.99
Taxable Monthly Lease Payment 329.77
________________________________________________________________________________- - - - - ______
Charges Payable at Lease Origination
License, Title, Registration Fees (estimated) . . . . . 120.00
Amount Due at Lease Signing .... . 120.00
GAP Coverage Included
Annual Mileage Allowance: 10,000
Disposition Fee: None
Excess Mileage @ $0.15 per mile
Reg. M Disclosure: NA
__________________________________________________________________
Observe that the formula still applies...
Payment w/tax = MF x (AC + RV) + (AC - RV)/Term (months)
= 0.00127 x (28,724.23 + 17,831.20) + (28,724.23 - 17,831.20)/36
= 361.71
Because we're financing sales tax, the 361.71 payment will necessarily include sales tax. Ohio computes sales tax on the sum of the monthly payments that reflect only taxable items and is, therefore, based on a payment of $329.77 in this scenario. You can't even begin to imagine the number of Ohio dealers that can't calculate sign and drive leases correctly... it's incredible! In Ohio, it is absolutely essential that those considering a sign and drive lease be experts in the mathematics of leasing; otherwise, they place themselves at the mercy of incompetent dealers. In fact, the Acura Dealer had absolutely no clue what I was doing and I wasn't about to educate them either. I reward only competent people with my business. So now, I drive a Honda Pilot that I purchased.
Technically, though, the above is not a sign and drive because I elected not to finance the License, Title, Registration Fees. I always pay those out of pocket because this charge is dependent upon the actual delivery date.
Hope this addresses your concern.
John
Medina, Ohio
$415/m, 42 month / 42K miles
$220 paid for DMV fees + 415 first month = 635 due at signing.
The sales is Duane Reade.
Is it a good deal??? :confuse:
I then tried to lease an '08 and was given prices in the $550 - $560 range. C'mon people, this is a Honda. My Audi costs less. Obviously this is not a good time to lease a Honda (money factor was .003). Does anyone know what will happen to the money factor in September? Hopefully it will go back down to .00029 or so.
I was also told the "All new" 2009 Pilot will be released in February or March of '08.
I'm returning my lease tomorrow while planning to lease a 07 Pilot EX-L w/o Nav or RES and I'm sorry but I still have many questions:
- Do you know if the $3500 dealer cash and the 0.0029 money factor from July still on?
- Is this 0.0029 money factor for a 24 or 36 month lease?
I also would really appreciate your help with the residuals on a 24 months and 36 months (15Kmiles/year) lease.
What surprises me is to read that Honda Finance is currently asking for a security deposit to consumers who qualify for its "Super Preferred" credit tier. It’s that true? Any idea what that security deposit could be?
Thanks in advance
Anzuelo
1. Does anyone have any advice or info about good deals in this area?
2. what should my monthly payments be - i don't need any extra options
Thanks
Any opinion/info about it?
They said they called NJ and figured out how to do the tax. So our signed contract has the tax listed in the monthly payment.
NOW they called saying they did it wrong and sent a new contract priority mail for us to sign and return asap, which makes me very leary.
The payment stays the same and it looks, legite, but I want to make sure I'm not missing anything. We have the car.
Here's the numbers:
48 month lease
Agreed upon value: 27207.00 (New contract 27027.18- $200 difference)
Amount due at signing 1325.00 (all fees same)
Monthly payment: 460.50 including 30.03 monthy tax
same payment on new contract, but monthly tax 0 and a lump some of 1427.06 upfront sales tax added to gross capitalized cost.
Residual same at 13654.00
(Gap insurance $600 includied in Gross cap. cost - I elected to have this - good idea?)
Am I missing anything? Please advise - my tags expire on August 30th...
It looks like they actually had to lower the price of the car to get the payment to come out the same.
As long as the payment, term, mileage allowance and residual stay the same, you should be fine..
regards,
kyfdx
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I'll take your last concern first because it was screaming for attention. A $600 GAP insurance fee???????????? WOW!!!!! I would check with your insurance carier and see if they can add a GAP rider to your existing car insurance policy. As a rule of thumb, GAP coverage should cost around 0.1% of the MSRP annually. So, if the vehicle's MSRP is $30,000, then GAP coverage should cost somewhere in the neighborhood of 0.001 x $30,000 = $30 annually.
Your first concern centers on NJ sales tax. Why is there a new contract? Did you live in Ohio when you leased the '07? If you did not reside in Ohio, then why are you paying Ohio sales tax? I believe Huntington Bank's charter allows them to do business in NJ and so your car would be titled in NJ. Therefore, it seems to me that you wouldn't pay Ohio sales tax if, in fact, you weren't living in Ohio at the time you leased the car.
NJ computes its sales on the agreed upon value of the vehicle and is payable upfront. For instance, if your car is valued at $20,000 and the sales tax rate is 7%, then your upfront sales tax liability is 0.07 x $20,000 = $1,400.00.
In Ohio, sales tax is levied on the total of all taxable payments. The tax is payable upfront but the sales tax can be rolled (i.e., capitalized) in the lease. If Ohio charged you sales tax, my guess is that you rolled the sales tax into the lease where the tax component of your payment amounts to $30.03. The tax would NOT be added to the gross cap cost. The tax would be added to the Agreed Upon Value...
Agreed Upon Value + Capitalized (financed) Amounts = Gross Cap.
I'm not sure why $200 was deducted from the agreed upon value other than it may be some non-taxable fee.
It's interesting to note that when a 7% sales tax is levied on $27,027, one gets $1,891.89 not $1427.06 (a $464.83 deficit). Unless the sales tax rate and/or agreed upon value is incorrect, it appears as though NJ has credited you with the present value of the remaining $30.03 Ohio tax payments. However, even that's puzzling because you most likely have at least 36 payments remaining and the present value of 36 payments of $30.03 will be far greater than $464.83. On the other hand, if the $30.03 really reflects NJ tax, then it's plausible that the present value of 48 such payments would equate to $1,427.06 provided that your money factor was extremely low.
As you can surmise, I have lots of questions. Something is missing.
I can tell you that mistakes are often made. The only way for me to help you is I would need to examine both lease contracts. I simply have too many questions. If you're interested, send me an email. Otherwise, I would get some clarification from the Ohio and NJ Dept. of Revenue. I would want to know why $200 was deducted and how the $1,427.06 sales tax was computed as well as where and how the $30.03 originated. Is the $30.03 Ohio or NJ tax?
No offense intended, but your post is somewhat confusing.
Good luck.
John
Medina, Ohio
I don't know how you are reading this, but it looks to me like they just leased the van this month.. There is no Ohio tax involved.
The variance is between how the bank assumed tax was calculated vs. how it actually was calculated. If the tax was figured incorrectly, then they have to re-do the contract. It seems they actually had to drop the selling price to get the same payment. I think that's why the selling price was reduced by $200.
The GAP insurance seems pricy to me, also, but it seems that was agreed to beforehand. It's hard to go back and re-visit your negotiations after the fact. It seems the only issue was a mis-calculation of NJ tax.
regards,
kyfdx
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"New Jersey does tax upfront, but not on the entire purchase price. It is either depreciation or total payments."
Well, which is it? I spoke with a NJ sales tax representative and they claim that tax is levied on the agreed upon value. If the NJ sales tax rate is 7%, then tax on the depreciation would amount to $936.12 (i.e., 0.07 x (27027.18 - $13,654). Yet, her tax amounted to $1,427.06. It may very well be that it could be on the total payments assuming the money factor was very very low (below zero if the $30.03 includes tax plus finance charge on the tax). This isn't at all plausible.
Some states levy tax on total payments (e.g., Ohio) and a few others levy it depreciation. Most, however, levy taxes on the payment streams. I refuse to look any state's on-line documentation as it may be outdated. The other problem is that many of these government workers are incompetent. So, I'm not sure what the answer is. The best approach is to examine current documentation or the documentation that was in effect at the time the vehicle was leased.
I know that payments and taxes are incorrectly calculated by many fund providers particularly when the first payment is capitalized. Whether or not amy capitalized the first payment is not known. I've already spoken to one software developer about the problem and they have agreed but have not amended their software yet.
"The GAP insurance seems pricy to me, also, but it seems that was agreed to beforehand."
Although this may be a reasonable assumption, I'm not clear as to whether it was or has been agreed to.
And so, I would need to examine all of amy's documentation before making any judgements. That's the safe thing to do instead of guessing or saying "well it looks like this or that".
I have this job where I read about leases... sometimes you can glean some information, without calling a NJ sales tax representative.. who still might give you the incorrect information about how NJ taxes a lease.
I understand leases can be complicated, but sometimes the answers are simple. A car dealer and/or a bank in Ohio called New Jersey and got the wrong information on how the tax is calculated. Now that they have the right information, they have to re-do the lease contract, to reflect the correct taxation. Seems pretty simple. If your payment, term, mileage allowance and residual haven't changed, then I don't see the issue?
This is a message board. The participants aren't likely to scan their documents and post them for our perusal. Help is provided, according to the information given. More information may be provided that will clarify the situation. I didn't find the original post all that confusing. I'll stand by all my advice.
regards,
kyfdx
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I still don't feel comfortable with the information provided. I need to see documentation. Otherwise, there isn't much I can do except guess and guessing doesn't cut it.
Best,
John
Where would the lease inception be included?
Thanks for your help