Last post on Nov 14, 2013 at 11:30 AM
You are in the Prices Paid - Buying & Leasing Experiences
What is this discussion about?
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
#57 of 194 Re: Regarding Taxes [tinopham]
Nov 04, 2010 (2:05 am)
There are four (4) methods used to compute sales tax ...
(1) Tax the lease payment as they are received. This is the easiest and by far the
most commonly used method in such states as FL, PA, and CA
(2) Tax the selling price (IL, MD, TX, WA)
(3) Tax the sum of the taxable payments (NJ, NY, OH)
(4) Tax the depreciation (CO)
Every state uses one of these methods. Dealers do not determine how sales tax is computed; individual states make this determination and regulate, accordingly. Depending upon how the lease is structured, the sales tax calculation can be very straight-forward and easy or quite complex. To compound the problem, states have different regs regarding the taxability of fees and rebates. Some tax acquisition fees and rebates; others don't. Those that tax depreciation often define depreciation differently with respect to one another. Some define it as the difference between the adjusted cap and the residual while others define it as the difference between the sell price and residual. Some use the mathematically correct formulas to compute taxes in those instances where taxes are capped in the lease; others don't such as NY. Some states levy tax on tax (Yup, it's NY) when taxes are capped. This, of course, is illegal in most states. I have no clue why this has gone unchallenged in NY. Perhaps no one realizes it except the NY Dept of Revenue's Sales Tax Division.
In Maryland, tax on a lease is levied on the selling price (i.e., Agreed Upon Value) at 6%. I'm not sure whether they call this tax a sales tax or a titling tax but it is levied on the sell price for both leases and purchases.
Hope this helps.
#59 of 194 leasing help
Nov 19, 2010 (5:49 pm)
I am not to bright so I am looking to you who are!
I am looking at leasing the Honda Accord LX the dealer has three offers:
Starting at MRSP at 22,605 with 2000 trade-in to 20,605 at $285 for 3yrs/15K miles per year and nothing down;
Starting at MRSP at 22,605 with 2700 discount to 19,905 at $241 for 3yrs/15K miles per year with 1500 down
Discounted MRSP to 21,105 with 700 trade-in to 20,405 at $248 for 3yrs/15K miles per year with 1500 down;
I cannot figure out what they are doing….???
I am reading and studying but I cannot differentiate yet between vehicle price, gross cap price, cap reduction price and adjusted or net cap price?
Any help is greatly appreciated.
#60 of 194 NJ Pilot EX 4WD lease
Dec 21, 2010 (9:13 am)
I have been quoted this via email:
Selling price $29,918
License fee $307
Doc fee $259
"Inception fees" $1932.65 including "DMV fee, tire tax, NJ tax, doc fee" (? would that mean I'm paying all sales tax up front? at 7%)
"Buy out" $19299.50
Monthly payment $380.74
I'm not the brightest bulb in the math class but I have been using a lease worksheet I found for Excel and am coming out with a monthly payment closer to $360. I think I may have been calculating the tax incorrectly, but for my life I can't figure it out.
Otherwise if you think this might be a good deal, I want to lock him in!
Separate question: this is my 4th Honda and 3rd dealer. I am finding that when I go back to my previous dealer, they never seem very interested in my business. (not just Hondas, but previous other mfr leases as well.) Do they not make much commission on leasing? Why do I now have to do all the pursuing, after having received their letters in the mail for the last 6 months begging me to come in? I gave my salesman 4 weeks and when I called to follow up, he had forgotten about me (though he wouldn't admit it) then emailed me a ridiculous quote to which I responded (in a nice way) and haven't heard from him since?
#61 of 194 Re: NJ Pilot EX 4WD lease [ayalakay]
Dec 21, 2010 (4:20 pm)
You're doing just fine and have raised some good questions. Your 380.74 payment does not capture NJ sales tax which amounts to 959.43. In order to capture this tax, your payment would have to be 408.71. Here is the breakdown of your lease quote based on the information you have provided…
Sell Price……………………. 29,918.45
AHFC Acquisition Fee……… 595.00
Gross Cap Cost…………….. 30,513.45
Cap Reduction……………… 0.00
Adjusted Cap………………. 30,513.45
Money Factor………………. 0.00139
Residual Factor……………. 58%
Residual Value……………. 19,299.50 (Res. Factor x MSRP)
Monthly Payment…………. 380.74
Amounts Due at Signing
1st. Payment………………… 380.74
NJ Sales Tax 7.00%........... 959.43
Doc Fee……………………… 259.00
Doc Fee Tax 7.00%........... 18.13
DMV Fees…………………... 307.00
Tire Fee……………………... 7.50
TOTAL DUE………………… 1,931.80
I seem to be $0.85 short of your $1,932.65. Perhaps you rounded a few numbers? I’m guessing that your 360 payment (actually, 363.39) may be the result of not capitalizing the 595 acquisition fee.
As for the dealership issues you’re having, I wouldn’t worry about it. They need you more than you need them. The commission on leases is no different than the commission on sales. The reason is that every leased car is a sold car. Someone is buying it and that someone is usually the fund provider (AHFC in your case).
Should you have further questions or would like a cost-saving lease proposal that makes sense, please visit my website…
Hope this helps!
#62 of 194 Quick Matlab/Octave script
Dec 21, 2010 (5:03 pm)
Here is a quick Matlab/Octave script you can use to figure out monthly payments on car or house or anything
function test_mortgage( cost, downpay, rate, year )
base = cost - downpay;
disp( strcat( [ 'Loan = ' num2str(base) ] ) );
pay = 0;
for i = 1 : 12 * year
pay = pay + ( ( base / 12 ) * ( ( 1 / year ) + ( ( rate / 100 ) * ( 1 - ( ( i - 1 ) / ( 12 * year ) ) ) ) ) ) ;
disp( strcat( [ 'Interest = ' num2str((pay - base)) ] ) );
disp( strcat( [ 'Total = ' num2str(pay) ] ) );
pay = pay / ( 12 * year ) ;
disp( strcat( [ 'Monthly = ' num2str(pay) ] ) );
1. Car for $14,670, $0 down, 5 years 0% APR loan:
Loan = 14670
Interest = 0
Total = 14670
Monthly = 244.5
2. $20k credit card balance with 19% APR to be paid off in 3 years:
Loan = 20000
Interest = 5858.3333
Total = 25858.3333
Monthly = 718.287
3. House for $1.2 million, $250k down, 30 years 4% fixed rate mortgage:
Loan = 950000
Interest = 571583.3333
Total = 1521583.3333
Monthly = 4226.6204
#63 of 194 Re: NJ Pilot EX 4WD lease [delta737h]
Dec 22, 2010 (12:07 pm)
Many Thanks, John!
#65 of 194 newbie question
Jun 02, 2011 (6:34 am)
Hi. I’m new to Edmunds and the knowledge I am gathering is great! Two quick question; is cap cost the same as selling price (minus incentives, down payment, left over from trade in.). Is base lease rate and money factor the same? If I have a base lease rate of 2.0 what am I calculating that with?
#66 of 194 Re: newbie question [karl_e]
Jun 02, 2011 (8:45 am)
Welcome to Edmunds, karl!
Cap cost and sell price are, conceptually, two different things. Let's look at some terminology...
The agreed upon value is the FRBB's Regulation M term for selling price. If amounts are capitalized (i.e., financed) in the lease (e.g., acquisition fee, taxes, etc.), then those amounts are added to the agreed upon value. The sum is called the gross capitalized cost. If there are cap reductions (e.g., cash, trade credit, incentives), then these amounts are deducted from the gross cap. The difference is called the adjusted capitalized cost. If there are no amounts financed and no cap reductions, then the agreed upon value, gross cap, and adjusted cap will all have the same value.
The base lease rate is that rate with zero dealer profit and is offered to those with outstanding credit. The base rate, AKA buy rate, doesn't mean the dealer doesn't make a profit on the deal. It only means that they don't make a profit on the financing piece. Money factors are generally based on a tiered structure. For example
0.00200 + 0% reserves (0 dealer profit)
0.00220 + 1% reserves
0.00240 + 2% reserves
Some fund providers incorporate a fixed dollar amount into their money factors which means that the dealer earns a profit regardless of the money factor. I think American Honda Finance does this but I'm not not sure.
A base rate of 2 may mean a money factor of 0.00200 or, it may mean an interest rate of 2%. And so, you need to get clarification. Ally Bank (GMAC) is one of only a few fund providers that uses an interest rate.
The money factor is used to compute your monthly payment...
Payment = F x (C + R) + (C - R)/N
F = Money Factor
C = Adjusted Cap Cost
R = Residual Value
N = Term (months)
If you have an interest rate, it can be converted to a money factor approximation by simply dividing the interest rate by 24. So, a 2% interest rate equates to a money factor of approximately 0.02/24 = 0.00083. By the way, money factors are formatted as 0.00XXX.
Hope this helps.