Ask the Car People.SM


How to Calculate Monthly Lease Payments

173 messages,  Last post on Apr 11, 2013 at 2:36 PM

You are in the Prices Paid - Buying & Leasing Experiences Forum.

What is this discussion about? Car Leasing

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

Messages Page 3 of 18

#21 of 173 Help in calculating rate by kl07rph

May 10, 2010 (2:38 pm)

Hello, hopefully one of the moderators can assist me.
 
I was previously shopping around for a 2010 X5, with a 36month, 15k mile/yr lease.
Ended up purchasing instead.
 
Just for my curiousity and guidance in the future, could one of the mods calculate a lease for me?
MSRP 59175
Initial Negotiated Price (Cap cost?): 56914
Illinois State Sales Tax: 4568.18
Registration: 194
Docs: 154
Electronic Filing: 25
OTD Price incl. fees 61855.56
Residual 60%
MF 0.0023
 
With my offered $5000 Cash Due, dealer was coming up with $891/month (inc tax), which for the life of me can not come up w/ those numbers! My calculations have been yielding a number in the high 700s/low 800s (i.e., leaseguide.com calc gave me 804, w/ tax).
 
 I hope one of the mods can assist me. Thanks in advance!
 
BTW, my wife and I purchased much lower than this dealer's quotes.

#22 of 173 Re: Help in calculating rate [kl07rph] by kyfdx HOST

May 10, 2010 (7:27 pm)

Replying to: kl07rph (May 10, 2010 2:38 pm)
Yeah... I get around $805/mo, as well..
 
But... more likely.. are you sure these are the correct residual and money factor for a 2010 model? Did the dealer give you these numbers? Because.. they look like the 2011 model numbers, to me...
 
regards,
kyfdx

#23 of 173 Re: Help in calculating rate [kyfdx] by kl07rph

May 11, 2010 (5:37 am)

Replying to: kyfdx (May 10, 2010 7:27 pm)
Hi kyfdhx, thanks for helping out w/ the numbers =). The dealer quoted me on the residual and MF (after some pushing), but I know they're a off from what ridewithg and leasecompare have (they have a 2010 X5 3.0 w/ 58% and 0.00175 base). I'm just glad my calculations weren't different from yours...I know this would have been our first time leasing but the dealer's 892/mo did NOT seem right to me at all.

#24 of 173 Re: Help in calculating rate [kl07rph] by kyfdx HOST

May 11, 2010 (5:44 am)

Replying to: kl07rph (May 11, 2010 5:37 am)
My guess is he was reading from the wrong sheet... but, his computer program put in the correct numbers..
 
I don't know the numbers for the 2010 model, but the ones you have there seem a little too good.. But, each month, the mix of incentives, money factor and residual can be all over the map, and usually work out to about the same payment..
 
Another thing to remember... the dealer can quote any number he wants over the phone or e-mail, but the residual is the only one you can verify from the lease paperwork.. BMW dealers are famous for marking up the money factor by the full 0.0004, and the acquisition fee to $925 (from $725). If the numbers don't match up, those are the first two places to look for discrepancies.
 
regards,
kyfdx

#25 of 173 Re: Help in calculating rate [kyfdx] by kl07rph

May 11, 2010 (2:02 pm)

Replying to: kyfdx (May 11, 2010 5:44 am)
Thanks for the insight kydfx,
 
Actually, I confused the money factor from the ridewithg.com's base rate for the 2010 X5 . Still, even with the money factor I was quoted (which is on the HIGHER side from what I've read here and on other bimmer forums), that sales guy or general manager goofed up enough (to their advantage) to get the monthly ~$85 more than what you and I calculated. I guess it'll be a mystery as to how they really did it...
 
Thanks for your assistance though kydfx! I now have the needed confidence to calculate a monthly in the event I opt to lease in the future

#26 of 173 How to obtain dealer's LEASE WORKSHEET ? by lola225

Jun 08, 2010 (6:37 pm)

How difficult is it to obtain the dealer's LEASE WORKSHEET ? I assume it's different than the Spec sheet? When I ask for it, I get the spec sheet and separate numbers for tax etc typed into an email. What does the Lease Worksheet contain and why do dealers seem reluctant to provide one?
 
Thanks.

#27 of 173 Re: How to obtain dealer's LEASE WORKSHEET ? [lola225] by delta737h

Jun 08, 2010 (7:22 pm)

Replying to: lola225 (Jun 08, 2010 6:37 pm)
Hi lola225,
 
The dealer's LEASE WORKSHEET is a computer generated docment that contains all pertinent lease data including sell price, doc fees, bank fees, gross cap, cap reduction, adj cap, money factor, residual, term, payment, taxes, etc. Dealers are reluctant to provide them because they assume customers will take it to another dealer and play the game "can you beat this"? If you really want it, then they should give it to you. Otherwise, refuse to do business with them. Once a lease has been consumated, most fund providers require that the dealer submit a similar document together with the lease agreement and other miscellaneous documents. It's different from a SPEC sheet which describes the vehicle attributes... kind of like the window sticker.
 
I wouldn't be too concerned about the lease worksheet or place too much credence in what the dealer is offering. Don't let the dealer control the deal. You must be in control. A good start is to create a lease proposal. I've posted several samples on different message boards (Honda Accord, Infiniti G37, etc). Just click on my screen name and feel free to peruse my posts. These are one-page proposals that provide all the details of the lease and are designed to save time, money, and aggravation. Once created, you can FAX/email it to the dealer and do all your negotiating via phone/email in the comfort of your home/office.
 
Hope this helps.
 
John

#28 of 173 Re: Numbers Not Adding Up [delta737h] by jerryken

Jun 18, 2010 (7:08 am)

Replying to: delta737h (Apr 27, 2010 11:14 am)
Delta:
Can you please tell me how to calculate sales tax on a lease in NJ? Is it .07 x the depreciaton or .07 x the selling price and spread over the lease term? Or just .07 thime the monthly lease payment which includes the finance charge? Thanks so much.

#29 of 173 Re: Numbers Not Adding Up [jerryken] by delta737h

Jun 18, 2010 (1:06 pm)

Replying to: jerryken (Jun 18, 2010 7:08 am)
Greetings jerryken!
 
Thanks for asking. You didn't describe your particular lease situation, if any, so I have to cover all bases. In short, the answer is none of the above. On October 1, 2005, New Jersey joined a 22 state coalition and bought into the Streamlined Sales and Use Tax Law. The key points governing sales tax treatment given to motor vehicle leases in New Jersey, under this law, are briefly summarized in the following document…
 
http://www.state.nj.us/treasury/taxation/streamfaqs.shtml
 
An important provision is described at Item 12 in the above doc…
 
"12. The Division has indicated that the tax base will be reduced by the value of a trade-in of property owned by the lessee that is accepted by the lessor as partial payment.
 
(a) Does this rule apply under both the original purchase price method and the total lease payments method?
 
(b) In determining whether the lessee is the owner of property, what is controlling (i.e. GAAP, UCC, tax treatment)? For example, a lessee trades in property subject to a finance lease. Is the tax base reduced if the lessee is considered the owner for GAAP purposes?
 
Since the tax is imposed on the lessee, the trade-in credit is applicable under both calculation methods. However, in both cases, the lessor must disclose the tax base (purchase price or lease payments), as well as the amount of sales tax due, on the paperwork provided to the lessee. As long as the property traded in was originally acquired by the lessee, it does not matter if there is an amount owed to pay off a loan. The trade in credit is based on the amount of value allowed by the dealer/lessor against the lease."
 
This document also describes the two methods for computing sales tax in NJ:
(1) tax rate x manufacturer’s invoice price (Item 7) and;
(2) tax rate x total taxable lease payments; otherwise, known as the total payment
    method (Item 8)
 
Either way, you can roll the tax (finance) into the lease (see below). More than likely, you’ll want to opt for (2- total payment method) as it is usually the cheaper of the two methods.
 
The best way to illustrate the sales tax calculation methodology is to use a concrete example. Because the first method is straight forward, I’ll describe the second using a hypothetical example. What follows is somewhat long-winded, so please hang-in. Consider a lease, originating in NJ, with the following data…
 
MSRP…………………….…… 30,000
Sell Price (S)...…………….…... 27,000
Acq. Fee (A)…………….…….. 600 (Acq Fees are taxable in NJ)
Trade Equity (Q)...………..…… (1,000) (we’ll assume financed negative equity- taxable in NJ)
Gross Cap………………..…… 28,600
Cap reduction (D)…………...… 500 (assume $500 cash down- taxable in NJ)
Cap reduction- trade-in credit… 4,000 (assumed trade-in allowance- not taxable in NJ)
Adjusted Cap (C)……………… 24,100
Money factor (F)………………. 0.00200
Residual Factor………………. 0.60
Residual Value (R)…………. 18,000 (Residual Factor x MSRP)
Term (N months)....…………. 36
NJ sales Tax Rate (t)………… 7%
 
Note that the financed items, A & Q, are taxable items and are assumed to be rolled into the lease (i.e., capitalized). The $500 cash down payment (D) is also taxable (see below). However, the entire trade-in value of $4,000 is non-taxable; regardless of the fact that a $5,000 loan balance remains outstanding producing negative equity in the amount of $1,000.
 
Taxable Payment = F x (C + R) + (C – R) / 36
                            = 0.00200 x (24,100 + 18,000) + (24,100 – 18,000) / 36
                            = 253.64
 
Total NJ Sales Tax Liability = Total payment tax + Tax on cash cap reduction
                                              = (t x N x Taxable Payment) + (t x D)
 
                                              = (0.07 x 36 x 253.64) + (0.07 x 500)
                                              = 674.17
 
The taxable payment is NOT the "lease payment". It's only purpose is to compute tax liability and is, therefore, an intermediate calculation.
 
Now, if you wish to roll the tax into the lease, then your payment, including taxes, is…
 
= 0.00200 x (28,100 + 674.17 + 18,000) + (28,100 + 674.17 – 18,000) / 36
= 392.83... this is your "lease payment"
 
Observe that 24,100 becomes 28,100 in the last calculation. This is due to the fact that the trade-in value ($4,000) is exluded as you owe $5,000 on the trade. The only roll that the trade-in value plays, in this example, is to compute the taxable payment. Beyond that, it's irrelevant and is not used to compute the lease payment (including taxes) or your regular lease payment, with or without taxes, for that matter. And so, the $4,000 was added back in order to compute the "lease payment". Again, this is triggered by the fact that you still owe money (which the dealer pays) on your trade.
 
Your intitial costs, payable at lease inception, are assumed to be the the 1st payment of $392.83 plus DMV fees and dealer doc fees plus any applicable taxes on the dealer doc fee or other miscellaneous fees.
 
Questions? Please let me know.
 
John

#30 of 173 My eyes cross and my ADHD mind goes blank by phineasboggs

Jun 18, 2010 (12:01 pm)

I just don't get it. I don't understand the whole leasing process or the numbers or the residuals.
 
Does this mean I shouldn't lease?
 
I've been looking at used RDXes and Lexi and have been worried about their health.
 
Today, I saw many cars including a Honda crossover car, that could be leased. I figure if I can pay under $400 for a NEW car that I like, Im ahead of the game. I just don't know how to get eher without my head spinning.
 
To wit: http://www.crownhonda.com/specials/new.htm2010 Honda Accord Crosstour EX V-6 Automatic 5Speed 2WD
$309.00 per month for 36 months. $2,299.00 total due at signing.

Messages Page 3 of 18

To POST a message, please Sign In.

Advertisement

Browse by Category

Browse by Vehicle
   View All Vehicles

Browse by Board
Browse by Topic
View All Topics

Edmunds Community

Advertisement