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Discussion Starter · #1 ·
Sorry for the newbie question, I've tried Googling and using calculators as well as searching the forums, but I might just be slow...

I am trying to calculate Sales Tax (I live in MN and it has to be paid upfront, but I can roll it into the lease) and my Monthly Lease Payments with a Down Payment (let's ignore the fact that down payments are bad :)). I can't seem to figure this out since it appears to be a circular calculation. I know that my Down Payment ($5,000) is split between the 1st month payment and the Net Cap Cost Reduction. But how can you calculate the 1st month payment without knowing the Net Cap Cost Reduction? And how do I calculate MN Sales Tax on top of this? It all seems very circular and I apologize if I am just dumb, but I would sincerely appreciate any help.

Here is what I'm looking at:

MSRP: $70,375
Gross Cap Cost: $66,015
Doc, Acquisition Fee, etc.: $780
Total: $66,795
Down Payment: $5,000
Adjusted Cap Cost: ? (I don't know this because it should be $66,795 - ($5,000 - 1st month), but I can't calculate the 1st month without the Adj Cap Cost).
MF: 0.00175
Lease: 36 months
Residual: 61% or $42,928.75
Monthly Depreciation: I don't know how to figure this out since it is based on the Adj Cap Cost, which is affected by the Cap Cost Reduction, etc.)
Monthly Finance Charge: Also don't know b/c of Adj Cap Cost and Cap Cost Reduction.

Thanks in advance!!

The only way I can do this is to have a cell in Excel set to $5,000 and then goal seek the Cap Cost Reduction to an amount that equals itself + monthly payment.
 

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the only way I can think of doing it is to start by taking only 4k as cap cost reduction and assume the 1k is for the 1st month.
Calculate your lease assuming a 4k cap cost. that will give you the monthly payment. I dont think there will be a whole lot left off that 1k you set aside.

That will give you a very close idea of how much your payments is (within 10 bucks probably) before tax.
 

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Discussion Starter · #4 ·
As I mentioned, I tried Googling and using online calculators, but they don't work.

I found a fix, but I'm not sure it's right. Basically, I put everything into Excel and have a cell for Down Payment and a cell for Cap Reduction. I set the Down Payment to equal my Monthly Payment + my Cap Reduction and I have Excel goal-seek the Cap Reduction number so that the Down Payment amount equals $5,000.

I just don't know how to get it to calculate upfront taxes which are then rolled into the lease...
 

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Discussion Starter · #6 ·
I have tried that file. The problem is, I still don't know how the dealer is getting to his tax calculation of $2252.32.
 

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MSRP-Residual=Taxable Use* Tax Rate should work
Working backwards a little here:
70,375-42,928.75=27,446.25
Total Tax/Taxable use=%
2252.32/27446.25=8%
2252.32/36=36 in taxes per month
8% appears to be the tax% he's using
 

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If it's 8%, your payment should be 799.41 with a total due at signing of 5,000, 61% residual, total dealer fees of 780 (acquisition fee of 725+55 misc?), Base rate of .00175,
Depreciation portion 554.98
Interest portion 185.21
Monthly tax 59.22
Total monthly payment 799.41

Included in the 5,000 due at signing;
Tax on the cap cost reduction of 306.66
1st months pmnt 799.41
Dealer fees 62.00
Cash/Check 3832.03
 

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Discussion Starter · #9 ·
Ok, so it looks like he's using the wrong Sales Tax Rate then, thanks. I assume I can just tell him this and he'll update it?
 

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Discussion Starter · #11 ·
Yes, the total tax for Minneapolis is 7.375%. His numbers suggest 8.206%. I am rolling my taxes (which need to be paid upfront) into my lease, by the way.
 

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One more edited version

LEASE
Term 36
Net Capitalized Cost/Amount Financed 62,880.55
Total Monthly Payment 793.92
Total of Payments 28,581.12
Amount Due at Closing 5,000.00
First Monthly Payment 793.92
Official Fee Paid Upfront 62.00
Acquisition Fee 725.00
Tax on Acquisition Fee 53.47
Capitalized Cost Reduction (Down Payment) 3,134.45
Tax on Capitalized Cost Reduction 231.17

COST
MSRP 70,375.00
Gross Capitalized Cost 66,015.00
Official Fee Paid Upfront 62.00
Acquisition Fee 725.00
Capitalized Acquisition Fee? No

REDUCTION
Capitalized Cost Reduction 3,134.45

SALES TAX
Sales Tax % 7.38%
Sales Tax 0.00
Capitalized Sales Tax? Yes

RESIDUAL / BALLOON
% MSRP 61.00%
Residual/Balloon 42,928.75

SECURITY DEPOSIT
Security Deposits 0

PAYMENT FACTOR / APR
Payment Factor 0.00165
Security Deposit Adjusted 0.00175

PAYMENT
Depreciation Portion 554.22
Interest Portion 185.17
Base Monthly Payment 739.39
Monthly Sales/Use Tax 54.53
Total Monthly Payment 793.92
Total of Payments 28,581.12
 

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Discussion Starter · #13 ·
Thanks a ton AnonCA, people like you are what make these forums so helpful!

It looks like you're coming out to where the dealer is as well. The only difference is that he lists a Cap Cost Reduction of $4202.62 and a MF of 0.00175. But it looks like it's about right, so I feel better about the lease. This is what I have from him:

MSRP: $70,375
Gross Cap Cost: $66,015
Doc, Acquisition Fee, etc. (rolled into lease): $780
Sales Tax (rolled): $2,252.32
Total: $69,047.32
Down Payment: $5,000
Cap Cost Reduction: $4,202.62 (which is $5,000 down less $797.38 1st month)
Adjusted Cap Cost: $64,844.70
MF: 0.00175
Lease: 36 months (10k mi/yr)
Residual: 61% or $42,928.75
 

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It looks like the 2252.32 for taxes results from:
Tax on car 1963.08
Tax on cap cost reduction 231.17
Tax on acquisition fee 53.47
I'm still 11-12 dollars off...argg
 
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