Learn how to calculate a lease...

[Travis Grundke]

My question comes on the favorite issue of sales tax. I understand that the State of Ohio has changed some of their laws recently in this regard, and I haven't been able to dig up the actual statue.

So normally, I recall that in Ohio the sales tax used to be factored based on your monthly payments: "Well, sir - you're payments are $300.00 per month plus tax".

But if that has changed to the total purchase price (as in a purchase), how does one appropriate the tax to the lease?

[GTakacs]

Use the calculator on page one of this very thread. It will take care of it.

If you want to do it yourself, you just add sales tax to the cap cost and don't add sales tax to the individual payments. Easy as that.

However if your state assesses tax on the entire sale price of the vehicle instead of the monthly payments (this is the case in TX) you might be better off with a premiere purchase/buyer's option balloon loan. No bank fees, easier paperwork, and you don't get double taxed if you decide to keep the car at the end of the term. Also, run the numbers on both scenarios and see which one works out better.

I hope this helps.

[Swampyankee]

I am a VW dealer in Mass. and we do it to show a low monthly payment. However; most people put little if no money into a lease.
Why would you put money down towards something that depreciates? Buy a house or something that will gain in value.
Noone should buy a car unless they drive only a few thousand miles a year and keep a car for at least seven years.

[Swampyankee]

At the rates we are using today, noone in their right mind would pit money down towards a lease and I "roll in" those fees for most of my customers.
With the money you put into these leases; you could be making a little even on a money market. Better yet...........put your money into a CD you can rollover and you will have made money instead of giving it away to some corporate entity, such as VW or Audi.

[Swampyankee]

Got a few instock now and would arrange shipping for the right price!
I am a dealer in MASS and would love to put it together for you! Sounds as if your dealer isn't looking hard enough.
Email me if you are interested or post here.

[Swampyankee]

Sold Audi's for Clair International in Boston, MA for years and never got the right calculations from the calculators on Audi or VW's site. NEVER! Don't believe everything that you see on their site. It is only to draw you into the showroom.
I know I should not say this but ; "trust me, it never works out to within $40 a month." It is always higher than the calculator says it will be. Check it out for yourself..........go to a dealer and try leasing or ballooning a car for the AFS or VCI quote. It will never happen. They will look at you and say you are crazy and you can show them yourself online; but they will show you with an actual lease or balloon calculation done with the numbers that are provided to them by AFA or VCI.

[Swampyankee]

With the balloon note the bank also agrees to finance your residual for you, keeping your payment the same until the car is paid off. The catch is... you finance the remaining balance at the interest rates available at the end of the balloon period for however long it takes to pay off your loan.
Too many what if's to deal with and there is no telling how long your loan could be. What happens if rates go back up over 7%?!? You could be paying for that car for a total of 8 years. You probably will be in an equity position after 6 years; but you could have been driving a fresh car long ago, with a warranty, new features, and for a payment that is affordable.
Food for thought!

[Swampyankee]

You wrote: "With a conventional loan for 60 months, for the first 20 months or so you actually owe more than the car is worth. With the baloon you owe more than the car is worth for 36-48 months depending on the term of your baloon. You can think of it as a 90 month long conventional loan that you trade in after 48 months.

So your monthly payments on a baloon that runs for 20 months would be the same as the monthly payments on a 60 month regular loan. I hope that made it clear."

This is not accurate at all. Can you give some follow up info, so I can better understand your point?

[Swampyankee]

Residuals are provided to all dealers by the lease company and the dealer cannot adjust them for any reason except to compensate for the increase or decrease in the expected mileage you will be driving. The residulas are dependent upon the region you live in as well.

[Swampyankee]

Equity is an abstract concept with cars. You can only have true equity if you "own" an appreciating asset. Most new cars will never be worth the purchase price, let alone more. Most people never truly own a car and when you lease it you certainly don't "own" it and when you finance with a bank conventionally you don't "own" it until that last monthly payment is made.
You pay for the equity you think you have!
Figure out how much a car will cost over a five year period financing it conventionally. Once you have paid it off......sell it(this is what most will do). Then figure out how much you put into it in monthly payments, taxes and maintenance. Deduct the selling price of your used car and deduct it from the other incremental costs and this gives you your "true cost of ownership". Once you do this with your lcalculation with your last car; you will never "buy" or want to "own" another car again.

[GTakacs]

Quote, originally posted by Swampyankee »

Sold Audi's for Clair International in Boston, MA for years and never got the right calculations from the calculators on Audi or VW's site. NEVER! Don't believe everything that you see on their site. It is only to draw you into the showroom. ..........go to a dealer and try leasing or ballooning a car for the AFS or VCI quote. It will never happen.

While I agree that the calculator on the VW and Audi website is for rough estimate I would beg to disagree with the fact that you can never get a car for that rate. You can do a lot better in most cases actually since the calculator uses MSRP to get the numbers and you would be insane to pay MSRP for any of these cars nowadays. I am paying $416/month for my A4 Avant for 39 months and the AoA calculator showed $470 at that time for my car.

Quote, originally posted by Swampyankee »

With the balloon note the bank also agrees to finance your residual for you, keeping your payment the same until the car is paid off. The catch is... you finance the remaining balance at the interest rates available at the end of the balloon period for however long it takes to pay off your loan."

Not entirely true..... Interest rates, or should I say interest rate increase over the original rate, are capped so it might be lower than the actual current interest rate offered at the end of the term. You have to read the agreement to be able to say anything accurate.
Balloon loans are not made in lieu of 8+ year conventional loans. They are made of in lieu of leases in states where leasing is infavorable tue to taxes or it is not possible any more due to vicarious liability cases. If anyone does a balloon he/she shoud be ready to turn the car back in at the end of the term, especially with the inflated residuals that we've been seeing in the past couple of years. AF and VWC will be losing money left and right on balloon returns (according to an article the automotive industry has lost over $2 billion (!) in 2002 on negative equity on lease and balloon turn-ins, which is money that lessors and balloon loan buyers won).

Quote, originally posted by Swampyankee »

You wrote: "With a conventional loan for 60 months, for the first 20 months or so you actually owe more than the car is worth. With the baloon you owe more than the car is worth for 36-48 months depending on the term of your baloon. You can think of it as a 90 month long conventional loan that you trade in after 48 months. So your monthly payments on a baloon that runs for 20 months would be the same as the monthly payments on a 60 month regular loan. I hope that made it clear." This is not accurate at all. Can you give some follow up info, so I can better understand your point?

A 24 month lease on a car would cost roughly the same on a per month basis with zero down as a 60 month conventional loan payment. As na example, on a $30K car a 60 month loan with 5% would be $566/month (I ignored TT&L for the sake of simplicity). If this car has a residual value of 63% after 24 months ($18,900), a balloon loan for 24 months would be $565/month with the last payment being $18,900. If you don't believe me, just put the numbers into my calculator that is posted on the beginning of this thread. This should drive home the point.

Quote, originally posted by Swampyankee »

The residulas are dependent upon the region you live in as well.

Not if you're leasing an Audi or VW, their residuals and money factors are national rates at the moment .

I find it hard to believe that you're selling cars for a living by posint all this misinformation and confusion..... Given that I am just an "amateur" who is on the other side of the desk and only deals with "car buying" (I don't buy them I rent them) every 3 years it seems like I should be selling the cars instead of you .

Now that we set the records straight let's get back to regualr scheduled programming!

[Swampyankee]

If you know so much about the car industry and financing why don't you join the crowd. We could use another "I think I know it all type on our sales floor."
Nice job taking most of my statements out of body and not understanding them fully. Keep up the good work.
You could not hack it in the car business because you have no interest in having an open mind. Apparently; you seem to be a product of the run down school system in the great State of Texas. Are they ranked in the top 48 states for education yet?!? I am sure you'll find some sort of calculator or statistical information to prove your point.
Just so you know....I am in the top 50 nationally for volume sales of VW's and in the top 15 in my region for volume sales of VW's. Who do you think know's more?!? Me or you? I know your response.

Modified by Swampyankee at 12:42 AM 11-3-2003


Modified by Swampyankee at 12:49 AM 11-3-2003

[GTakacs]

Quote, originally posted by Swampyankee »

If you know so much about the car industry and financing why don't you join the crowd. We could use another "I think I know it all type on our sales floor."

I think I can earn my own daily bread wit developing software for a living, thank you very much. And the more I see how car sales operate the less I want in on it....

Quote, originally posted by Swampyankee »

Nice job taking most of my statements out of body and not understanding them fully. Keep up the good work. You could not hack it in the car business because you have no interest in having an open mind.

I quoted every single line from your posts, I did not take anything out of context. I just pointed out that nothing is as simple and clear cut as it might seem. I did not disagree with you on your points for the most part I just tried to state that your answers were not complete or entirely accurate (to which you have yet to rebut). And I have plenty of open mind....

Quote, originally posted by Swampyankee »

Apparently; you seem to be a product of the run down school system in the great State of Texas. Are they ranked in the top 48 states for education yet?!? I am sure you'll find some sort of calculator or statistical information to prove your point.

Hahaha! Best line from you so far! Too bad you're sorely mistaken again (ask me if I'm suprised ). Just because I live in Texas today does not mean I am a born and raised redneck now, does it? I actually grew up in Europe and moved to Texas to get higher education. I successfully graduated from a fully accredited private university ( http://www.tcu.edu ) with a BS in computer science and currently taking master level courses at UTA Arlington part time to get my MSCS degree. And as we all know the UT system is second best to MIT in the nation.....

Quote, originally posted by Swampyankee »

Just so you know....I am in the top 50 nationally for volume sales of VW's and in the top 15 in my region for volume sales of VW's. Who do you think know's more?!? Me or you? I know your response.

Given that you have 14 posts on Vortex and I have been around for a year and a half helping the community I think I'll let my posts speak for themselves. In the meantime feel free to read all my posts in this very thread from page 1 as well as check out the financial calculator that I whipped together for the masses (page 1 in this thread).

And here are some of the financial gems that I managed to put together over time and managed to find this morning (again, look for my name to see what I had to say):
http://forums.vwvortex.com/zerothread?id=933117
http://forums.vwvortex.com/zerothread?id=906203
http://forums.audiworld.com/a4...phtml
http://forums.audiworld.com/a4...phtml

And remember, people on message boards are usually judged by their posts (not the number of them, but their value) and not by their profession. There are plenty of VAG sales managers lurking on Vortex and helping out others. You might want to take notes from Cyberrick to see how it's done..... (he didn't have to prove his point that he's a sales manager, his valuable posts spoke for themselves)

[kande]

can anyone help me figure out what my payment for a vehicle thats 185000 out the door with nothing down will be? would it be the same formula??

[VeeDubDriver]

In order to figure out the payment you need all the pieces of the puzzle.

[Audi Advocate]

Thanks for the advice - just had my A6 4.2 stolen from my driveway - now leasing a new S4 - learned the hard way that insurance covers the depreciated cost - lost my downpayment.

I recommend putting minimum down 'cause if it's stolen (likely in Toronto) you lose the upfront $$.

Advice: Get Boomerang 2 - and a gun.

[LETTERMAN52]

Thanks for all the info. I really appreciate it. I'm in a lease now and it just seems like it's a whirlwind of money coming out of my pocket, but now after reading your post i see that it isn't really that bad. Thanks again....

[kande]

im going to be leasing my vehicle tomorrow.. and i coul REALLLLY use some help! i have literally read this thread 6 times over, and it doesnt make any sense to me... im bad with all the silly names for stuff, the numbers, percents, etc.

the car im looking at has a sticker price of 22,105... and the tax is at 7.6%... im planning on using the 1000 vw owner loyalty, plus 1500 down... if anyone could help me.. im desperate.. the guy had me quoted at $334.54 on a 48 month lease, at 15k miles/year... its an 04 plat. grey jetta gls tdi with leather and 5 spd... if that matters... any help is appreciated!

[Cyberrick]

Good Morning:

Backing into the lease you have with 7.6% Use Tax and a total of $2500 due at delivery it would appear that the dealer is hosing you.

The vehicle you describe a 2004 Jetta GLS TDI 5 Speed with Leather does have a MSRP of 22105 and a invoice price of 20989.

I figured a lease with a total of $2500 due at delivery the 1500 from you plus the 1000 owner loyalty you said you were getting. A 48 month lease with 15000 miles would generate a cap cost of 22538 or $433 over the MSRP of the vehicle.

Now a couple of things I do not know. One did you get an A Tier Approval from VW Credit. The rent factor or interest rate is higher on a deal where the customer has marginal credit. Also you said 1000 owner loyalty I am in a hurry this morning but as I recall the owner loyalty is 500 on 2004 models and 1000 on 2003's.

Anyway, based on your numbers a fair deal on this vehicle at 500 over invoice would be $306.96 per month with an A Teir Approval through VW Credit with 7.6% Use Tax for 48 months and 15000 miles.

It is the last day of the month you are in a position of strength they do want to move the car. Go back in and tell them to refigure the deal with a cap cost of 21489 (500 over) for 48 months with 15000 miles. It should come out about 306.96 per month as long as you have good credit.

[kande]

306 for everything included?!?!?!

son of a .. i thought this was a pretty good deal... ohhhh myyy god... the lease is 334/month... my mom bought an additional warranty... so my payment is about 358. ohmy****inggod...

i so got ripped off.. is there anything i can do?!?!?!?!?!

[Travis Grundke]

I wouldn't flip out quite so much - you may not have qualified for Tier-1 rates. You also said you added in an extended warranty.

For future reference - these are things you should figure out *before* signing papers.

[GTakacs]

Don't cry over spilled milk. There is nothing you can do at this time about it. Enjoy the ride and nex time do your research before you sign.

[Guyute_]

That sounds like you got Tier 2 or 3 credit. At Tier 3 you did fairly well, at Tier B you got it just about right. It is harder to qualify for the A tier or Tier 1 than you think.

[kande]

we qualified for a teir credit... i asked him specifically.

[usmc1811]

How do you know what rate you qualify for and that they will give you the best rate?... I did the lease/buy option- 36 months, tier 1 credit but got a rate of 4.75 with nothing down... did I really get screwed??

Thanks.

[StuntUCA]

hey guys,

im about to lease a 20th anniversary in black. i need some help here because i dont have much time to do all the math. the cost of the vehicle has been agreed to be $21,812.

they have offered me a 48 month lease/15k miles/$0 down for $380. what do you think? i may put down a security deposit just to hold it for the night since lease rates end this evening.

thank you in advance. call me if you need to.

RJ
773.802.8989

[Cyberrick]

Somebody is full of C---.

I ran the numbers and based on a cap cost of 21812 a 48 month lease with 15000 miles, and $0 Down would be far less than $380 per month. Unless of course the dealer has you fixated on the price and they are hammering the hell out of you on the rate.

First of all while VW Credit is nice when there is a program. They are not currently supporting 2003 models and they are in fact $68 per month higher than the best Bank in the country if they are telling you 380.

Provident Auto Lease is Best at $312.62, Followed by Wells Fargo at 325.52, then Huntington Bank at 329.72. VW is at 359.45 with security and 364.60 without.

There are numerous ways to Skin the Proverbial Cat. The 20thAE at 21812 cap with a 380 payment ain't what it seems to be.

[StuntUCA]

Rick,

Can I contact you at work and discuss more details with you so Im well informed and educated when I speak to a new dealer tomorrow.

Thanks!

[VR6 Master]

well i have never leased a car before but, never the less i learned a lot with what i read in this thread and thank you

[Integrale]

Could you please send me the file to my home address? I'll IM you.

Thanks.

[waffleboy]

Hello everyone...I have been quoted today a lease on a '03 Jetta Wolfburg Edition with 12,000 miles a year for 36 months for $204 a month and 2600 down. Is this a good deal...what Incentives/rebate can I add to it? He already to the loyalty incentive off it which was of the amount of 500 dollars.
I am in the Boston(MA) area. Can anyone help me with this?
Let me know A.S.A.P as I am going to make my mind really soon on this deal.

[Cyberrick]

Waffleboy. you have not supplied enough information to back into your numbers. A 2003 Wolfsburg Jetta is not enough. Would need description of vehicle either MSRP or list of options auto/manual, moon roof, cold weather, esp, monsoon.

I can tell you that the car is probably not eligible for the Owner Loyalty incentive. Most if not all dealers reported all remaining 2003 models into Service Loaner status at the end of November to capture the maximum incentive available on the remaining cars. The Wolfsburg Jetta had a $2750 November incentive.

So essentially what happened at the end of last month is all remaining 2003 models were put into this status to earn the cash incentive. Our Central Region reported something like 1200 of them during the last couple days of November. Not that they are actually being used for service loaners. It is just a loop hole we use to help sell the vehicles. VW encouraged this to help with their sales figures for the month and year as well. While they did not come out and say do it. It was clear that not doing it would make it very difficult to sell them off as the December incentive dropped to like $1000.

However, due to this status the vehicles are technically sold as far as VW is concerned so no additional incentives would be payable on them. A smart dealer or sales person would not tell you the loylaty incentive was no good on the 2003's anymore. They would simply act as though they were giving it to you by adjusting the price numbers. In other words a base Wolfsburg 5 speed with a 20075 MSRP and a 18799 invoice price is now technically on the books for 2750 less or 16049.

So if they told you they were selling you the car at say invoice 18799 less the December dealer cash of $1000, less your Owner Loyalty of $1000 or 16799. The deal would still be 750 over invoice.

While your deal does not sound terrible without the exact options I cant say for sure. You also said 2600 down? Does this mean 2600 down plus other start up fees like first payment and plate fees, or do you mean 2600 out of pocket?

The car I described above a base 5 speed at 2000 under invoice would lease as follows: with 2600 total due 193.58 including 6% Michigan Tax, or 181.41 with 2600 down and a total of 3002.81 due at delivery in Michigan with 1st payment, title, and plate transfer.

This is not however, through VW Credit they are about $30 per month higher than the best banks. I figured this through Wells Fargo. VW as I said no longer supports 03 models with finance or lease programs.

[waffleboy]

oops...so here are the numbers. MSRP 20,550( first month, taxes....all the dealer said)...it is a Jetta '03 Wolfburg Edition with monsoon, Cold weather package, manual with 16 inch BBS wheels, front sport wheels, sport suspension, rear spoiler, special side badging. CD player, cruise front and rear carpeting, antitheft alarm and radio, Immobilizer III theft deterrent system. I got this number from the sales person I talked to....203.35 a month and 2548.35 down for 36 months and 12,000 miles a year.
But now I have a problem...he won't give it ti me to lease! He says that car has certain sale criteria and one of them being not to lease it!!! Is this normal? I spoke to the manager...he says the '03 he's got he can't lease....something to do between him and VW of America! I don;t get it.

[Cyberrick]

Yeah, it is like I said before the car is technically already delivered and reported sold to VW to get the $2750 November Dealer Incentive. That does not prevent them from leasing it though. How does the tax work in your State? Is it use tax on the monthly payment or is the cap cost of the vehicle taxed and not the payment. If you are not sure maybe someone listening can tell us. I think you said Boston right? The car you are talking about is a 20550 MSRP and 19219 invoice car. The dealer has received $2750 in incentive on the car so its adjusted invoice is now 16469. You should be able to get for about 16769 right now or 300 over his invoice.

In Michigan we have 6% tax. My recommendation would be to buy the car. Out the door with 6% tax it would be 17840.54 here. Take off your 2600 down stroke and finance 15240.54 for 60 months. Chase has a 3.34% rate right now that works out to 276.15 per month. More than the lease but 3 years from now you would have some equity.

If you let me know the tax method in your State I will figure a lease for you with Wells Fargo. Call the dealer and ask for the Finance Manager. Ask him if they use Wells Fargo in your State. They are about $30 a month better than VW Credit on the 2003 models.

[waffleboy]

hey o.k...I got another one he could lease out...so the deal is, same options as before: it is a Jetta '03 Wolfburg Edition with monsoon, Cold weather package, manual, 16 inch BBS wheels, heated sport wheels, sport suspension, rear spoiler, special side badging. CD player, cruise, front and rear carpeting, antitheft alarm, radio, Immobilizer III theft deterrent system and the additional option that wasn't on the first car I was looking at is the sunroof. It is for $217 a month and 2548.35 down for 36 months and 12,000 miles a year. It is black with gray interior. What do you guys think about that one? I think it is a good deal.