ok, so when you say “buyout” in this case, are you referring to the “purchase quote” amount I got, or some other number?
I was under the impression that the lease purchase quote amount was to buy the vehicle outright and that the adjusted lease balance is whatever is remaining to pay on the lease total of all payments…which might include early term fees and taxes as well.
Thus is not the adjusted lease balance. Your adjusted lease balance is basically the adjusted capitalized cost minus the net depreciation paid.
I may very well be mixing numbers and terminology here. Sorry if that’s making it harder to understand the situation!
I did tell them I wanted as close to $59K as possible…they responded with let me give you an offer last after you get other offers. I asked them to please just provide an offer.
Id expect high 30s to low 40s.
Here is how the contract defines adjusted lease balance:
Adjusted cap cost was 62996 at start
Monthly payment is 1045
Rent charge total was 10103 = 280 per month
1045 - 280 = 764 per month reduction
9 months in = 6879 reduction
adjusted lease balance would therefore be ~56117
Sounds like you are right that the issue I’m having was in not understanding “adjusted lease balance”. Since ALB - FMV will be a big positive number, then clause 5 of Calc A would apply and be the most painful part of the early term cost.
Thank you,
Yes, I am finally understanding that and realizing that this is in fact a very large positive number, rather than a negative number. 
Rent charge isnt even spread. Its more heavily front loaded (because the adjusted lease balance is higher), so your adjusted lease balance is higher than that because your paid rent charge is higher.
OK, not surprised that is the case. It just means the adjusted lease balance is higher than I think (~$57K, but not higher than the total cap cost at start of $63K), right?
Correct. $57ish is where youre looking at.
So Calc A of this contract is likely to be
A1 - $0 there are no unpaid lease pymts that are due
A2 - $0 there is no excess wear or damage ATM
A3 - Guessing $0 since fees were in the adjusted cap cost and taxes are monthly on a lease, right?
A4 - $595 vehicle turn in fee
A5 - $15K (adjusted lease balance 57000 - fair market value 42000)
A6 - $920 ish for early term fee
Total of about $16500 to turn this in early, maybe slightly higher since adjusted lease balance may be a little higher than I think or the FMV may be a little lowwer.
That will have made my effective payment for the 8 months I had the thing at least $3K per month 
I’ll do Calc (A)(5) as it is the most complicated.
Hopefully, FMV > Adj. Lease Bal. But not necessarily… The number of remaining base payments is used to compute the adj. lease balance but is not the sole determining factor. It does not equal the adj. lease balance.
You can use the Excel PV function to determine the adj. lease balance as follows…
Lease Balance = PV(actuarial monthly rate, # of base payments remaining, -base payment, -residual, 1)
To get the actuarial monthly rate, use the Excel RATE function as follows…
Actuarial Monthly Rate = RATE(term, base payment, (-)Adj. Cap, Residual, 1)
Adj. Lease Bal. - FMV > 0, otherwise, if < 0, it’s treated as zero.
NOTE: Your lease agreement will likely reference either the actuarial rate or constant yield rate in the paragraph that addresses the adj. lease balance calculation. Both essentially mean the same thing.
The rest is a piece of cake. You can choose the lesser of Calc (A) and Calc (B).
Hope this helps.
Ohhhhhhhh…
That makes a lot of sense (b/c I assume that the casino always wins…).
I already marked a solution, but this was excellent information and thank you very much for providing the formulas I plugged them in and get an had an adjusted lease balance of 57361.
I think the big issue here is who/what sets the FMWV used because that is what will impact your loss the most.
Selling price at auction, if MBFS is like other banks.
But that isn’t specified anywhere is it? Or is there an industry standard definition that exists?
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