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Dissecting the Deal - How To Spot a Good Lease
10 Steps to Leasing a New Car
The "Residual Value" of Leasing
Calculate Your Own Lease Payment
#116 of 173 Re: Trying to understand my leas payments [bsyah]
Oct 18, 2012 (9:40 pm)
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.
#117 of 173 Re: Trying to understand my leas payments [delta737h]
Oct 19, 2012 (8:06 am)
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?
#118 of 173 Re: Trying to understand my leas payments [delta737h]
Oct 19, 2012 (8:23 am)
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.
#119 of 173 Re: Trying to understand my leas payments [bsyah]
Oct 19, 2012 (9:49 am)
"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.
#120 of 173 Re: Trying to understand my leas payments [delta737h]
Oct 19, 2012 (10:31 am)
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.
#121 of 173 Re: Trying to understand my leas payments [bsyah]
Oct 19, 2012 (11:37 am)
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.
#122 of 173 Re: Trying to understand my leas payments [delta737h]
Oct 19, 2012 (12:59 pm)
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.
#123 of 173 Re: Trying to understand my leas payments [bsyah]
Oct 19, 2012 (3:54 pm)
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.
#124 of 173 Re: How to Calculate Monthly Lease Payments [kirstie_h]
Nov 28, 2012 (6:21 pm)
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%
#125 of 173 Re: How to Calculate Monthly Lease Payments [lazo23]
by kirstie_h HOST
Nov 30, 2012 (7:29 am)
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.