FMC Red Carpet Leases did something similar to 5th 3rd Bank about 20 years ago. They used a pair of annuity factors predicated, of course, on an interest rate. They used a capfactor and a residual factor. They added 0.0011 to the capfactor to account for their industry high acquisition fee. This meant that for every $1,000 of cap cost, the lessee would pay $1.10 each month. So, if the adjusted cap was $30,000, the monthly acquisition charge amounted to $1.10 x 30 = $33.00. On a 36 month lease with an interest rate of 1.5%, the present value of the $33 recurring charge is a whopping $1,162; the cost of the acq fee!
At 1.5% and an adjusted cap of $30,000 with a residual of, say, 18,000; the FMC payment was calculated as follows…
(0.02839 + 0.0011) x 30,000 - 0.02714 x 18,000 = 396.18
Later, FMC changed to an MF. So now, they’re back to using an interest rate?
I believe Ally Bank took over leasing operations for GMAC. GMAC did something similar to FMC only they discounted the residual one month nearer to the present which effectively increased the payment by a few dollars. My best guess is that their reason for doing this was due to the fact that they didn’t charge a disposal fee at that time.
Initially thought OP was talking about a Honda thinking that edmunds converted their MF to an interest rate which seemed very strange. They do use an MF as you know.
At the bottom of OP’s post, he’s talking about a Ford Fusion Hybrid. Didn’t realize Ford uses an intereste rate. They must have switched back after examining several Fusion posts at edmunds…
kyfdx Posts: 86,882
July 26
mikeset said:
Hey guys, may I please have the info for Hybrid SE - 36/10 MF, RV and incentives in 96804.
Trying to calculate the correct price for a lease that I’m currently working on.
State: CA - Tax rate is 7.75%
The quote I received for example
MSRP: 50000
Sales Price 45000
Sub total is 45000
Fees: 700
Sales Tax: 3,487.50
Net Sales Price is 49,187.50
My question - is the sales tax added on the total? or does that apply to the monthly rate? it seems like the dealer should not be adding the sales tax but instead, it should be added on the monthly payments?
Sorry about that. Complete newbie. However, back to my question, he tax shouldn’t be in that quote. Am I wrong? Should the price be at 48040 and do the math from there? Everything about the quote looks off. Even down to the msds
Tax is tax, they can’t screw you on that. Allot of times these print outs show tax as if it were a sale. What’s the MF and residual? Get that and you can put it in the calculator
Do I even push back? The way I’m doing it, I’m basing it on the 48040 sales price, which isn’t much if a discount. But Volvo’s are hard to lease it seems. Not even sure what the 1386 amount, I’m assuming it’s due at signing. So then it’s not really free till Jan 2019. Lol