Last post on Apr 11, 2013 at 2:36 PM
You are in the Prices Paid - Buying & Leasing Experiences
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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
#149 of 173 Re: Help getting to the correct payment [stevied32]
Jan 26, 2013 (7:06 pm)
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.
Feb 19, 2013 (11:38 am)
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?
#151 of 173 Re: Taxes on lease [thngpg3388]
Feb 19, 2013 (1:07 pm)
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.
#152 of 173 Re: Taxes on lease [qbrozen]
Feb 19, 2013 (1:28 pm)
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.
#153 of 173 Re: Taxes on lease [delta737h]
Feb 19, 2013 (1:48 pm)
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: http://www.leasetips.com/salestax.htm
#154 of 173 Re: Taxes on lease [qbrozen]
Feb 19, 2013 (2:27 pm)
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.
#155 of 173 Re: Taxes on lease [delta737h]
Feb 19, 2013 (3:07 pm)
however, is it true that interest is not charged on the tax? So, in effect, it is the same as paying tax on the payment (even if calculated differently, if the end result is the same, it doesn't matter). As long as interest isn't charged on the tax, there is no benefit paying it up front, which was the poster's question. Correct?
#156 of 173 Re: Taxes on lease [qbrozen]
Feb 19, 2013 (3:25 pm)
If the tax is capitalized, then it will be subject to interest charges as it is included in the gross cap. Below is a lease I constructed almost two years ago in Ohio...
April 11, 2010
2010 Honda Accord LX
Retail Pricing Information
Base MSRP 2010Honda Accord LX AutomaticModel CP2F3AEW
Agreed Upon Value
Amounts Financed (Capitalized)
AHFC Acquisition Fee
Medina Sales Tax 6.50%  36  206.93
Gross Capitalized Cost
Capitalized Cost Reduction
Adjusted Capitalized Cost
Residual Value (Residual Factor Χ MSRP)
Cost of Money/Term
Lease Payment Itemization
Monthly Lease Payment
Taxable Monthly Lease Payment
Estimated Charges Payable at Lease Origination
License, Title, Registration Fees (estimated)
Amount Due at Lease Signing
Fund Provider: AHFC
GAP Coverage: Included
Annual Mileage Allowance: 12k
Disposition Fee: None
Excess Mileage Charge: $0.15 per mile
#157 of 173 Re: Taxes on lease [delta737h]
Feb 19, 2013 (4:01 pm)
This goofy line...
Medina Sales Tax 6.50%  36  206.93
from the above post should read...
Medina Sales Tax 6.50% x 36 x 206.93..... 484.22
PS: Anything that is capitalized in a lease, taxes or otherwise, is going to be charged interest.
#158 of 173 Re: Taxes on lease [delta737h]
Feb 19, 2013 (5:59 pm)
Thanks for all the info. A little over my head.
So paying upfront and paying monthly is essentially the same?
Only asking because I have 2 lease offers: 1 w/ all fees/taxes rolled into monthly payments and the other with much higher upfront costs including tax w/ lower monthly.
the higher upfront cost sounds cheaper in the long run but maybe i'm missing some additional fees.