2025 GMC Sierra EV Lease Check

Ask the Hackrs
1

Hi All. Just wanted to run this deal by you all to get your thoughts. I been hashing it out with dealerships overt he last 30 days because Costco is a bad influence :rofl:. Attached is an offer I got fro the dealer and after auditing the numbers I have come to the assumption that this deal is based on a MF of .00492 (11.8%) since there is no other way that they can get to almost $14.5k in rent charge by not boosting the cap cost. Which to me seems like they would not do because that has to be disclosed but the MF or APR does not. Can you share your strategies as to how you have solved this issue? I have sent them several iterations of my deal at a MF of .00246 which was still above the base MF of .00100 I was requesting because I have a 775+ credit score. Anyhow this is my first go around in really getting into the nitty gritty of leasing and it amazes me how convoluted these conversations can get.

20250430152955561.pdf (1021.9 KB)

2

Nope. Looks like you forgot to divide by 2.

14441.28 /36 = MF x (96916.50 + 66153.30)
MF = .00246

I did confirm all the dealer’s calculations manually and they are correct.

FWIW-

All data should be vetted such as acquisition fee, doc fee (regulated by some states), cost of money (e.g., money factor), gov fees, residual, rebates/incentives, sales tax rate, etc. Make sure the residual matches the term and annual mileage requirement. Check available tax credits/incentives via the fund provider who may cover taxes or, at minimum, may assess a lower sales tax rate to energize sales for some models (e.g., Texas).

Organize all relevant data with the goal of creating a lease proposal that reflects your target deal. The idea is to create your own target deal (proposal), not replicate the dealer’s deal.

Craft a lease proposal (example below- the round peg, round hole won’t work) and email it to the sales manager (SM), not a floor salesperson as they’re often Mickey D order takers and lack knowledge. Be sure to contact the SM first to let them know you’re emailing them a one-page lease proposal b/c you want to close the deal ASAP. Be nice but firm. Unless they’re very stupid, once they see your magnificent proposal it will speak volumes. They’ll immediately know it’s time to put away their toys and Crayolas b/c it’s time to get down to business absent all the BS.

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All numbers must be accurate otherwise, you’ll lose credibility. Negotiate via phone/email. Once an agreement is reached, ask the dealer for a review copy of the lease agreement and all contract addenda BEFORE you go to the dealer and sign. Moreover, it’s helpful to know the terms and conditions of the lease contract such as early termination liability criteria and purchase option criteria as well as lease amortization methodology and excess wear/tear criteria. If all is as agreed, tell the SM that you’ll come in to sign asap. You don’t want any surprises or dealer excuses like …. Oh, we made a mistake. That’s unacceptable and shouldn’t be tolerated.

If the dealer isn’t transparent or is uncooperative or showing signs of incompetence, WALK AWAY AND MOVE ON!

Leasing is time-consuming and requires a good deal of study and attention to detail. If you don’t have the time to commit, perhaps your best alternative is a good broker. There are some outstanding brokers on this website. However, if you’re willing to commit your time and resources, be sure to always control the deal. That can only be achieved with education which breeds confidence and increases the likelihood of success.

??? Let me know.

5 Likes
3

My calculation for the rent charge for an MF of .00246 was $7,220.52. using the formula

Monthly Rent = ((Cap Cost+Residual)/2)Ă—MF

96,916.50 + 66,153.30 = 163,069.80/2 = 81,534.90 * .00246 = 200.57 * 36 = $7,220.52

Whereas the dealers number for rent was $14,441.25/36 = $401.15. Almost double my number.

This is why I assumed a dealer MF of .00492

What am I missing?

96,916.50 + 66,153.30 = 163,069.80/2 = 81,534.90 * .00492 = $401.15

4

You don’t divide by 2

1 Like
5

That’s b/c you divided by two…

Monthly rent = MF x (Adj. Cap + RV)
= .00246 x (96916.50 + 66153.30)
= 401.15

Total rent = 36 x 401.15 = 14441.40 (rounding- close enough)

BTW and FYI-

Not to be a jerk but I used to cringed when I saw my math students doing this.

Consider…

96,916.50 + 66,153.30 = 163,069.80/2 = 81,534.90 * .00492 = $401.15

163,069.80/2 does not equal 81,534.90 * .00492
And
96,916.50 + 66,153.30 does not equal 163,069.80/2

Also,

Monthly payment = MF x (Adj. Cap + RV) + (Adj. Cap - RV) / Term
= Monthly Rent Charge + Monthly Depreciation Charge

Hope this helps.

1 Like
6

Okay, Fair enough. Thanks for helping me understanding the error in my assumptions. Now I understand there are 2 variations of calculating MF, but they are used under different circumstances.

Ha Ha, no offense taken. As an accounting and audit professional I can understand.

@delta737h @mllcb42 appreciate both your inputs.

7

What multiple variations are you talking about?

8

As a former actuary, I did get involved with accounting audits. Did some statistical sampling and loved studying accounting forensics (e.g., Benford’s law). Great stuff!

9

My use of the formula that includes dividing by 2 represents a financial or accounting approach to lease calculation. It’s based on the concept of calculating rent (interest) using the average balance of the cap cost and residual over the lease term.

In contrast, the version commonly used in the lease industry, as described here by you and @delta737h, does not include the division by 2. Instead, it uses a streamlined formula that applies the full cap cost plus residual to a reduced money factor (which is essentially cut in half) to simulate interest on the average value.

The key difference is this:

The accounting model reflects a true interest approach, where interest declines as the balance declines (as in any amortizing loan).

The industry model assumes the balance is flat across the term, charging consistent interest regardless of actual depreciation or time-value.

Both formulas produce similar outputs if the money factor is handled accordingly, but they reflect two different philosophies. And obviously 2 very different costs to a lease.

10

Thanks for share this sample worksheet, This is the one I was using when making my proposals. I know understand why there was so much back and forth, but I also is confusing why nobody even the managers I talked to pointed out the formula I was using to calculate the rent charge.

GMC_Sierra_EV_Lease_VIN_1GT40LEL4SU409751.pdf (29.8 KB)

11

You’re misunderstanding what money factor is.

There are not multiple ways to apply it. Youre trying to treat money factor as if it is an interest value. It is not.

If you want to express money factor/rent charge in a more traditional sense and break it down to an equivalent interest value, you will see that the averaging you’re discussing is already occurring and is inherent in the definition of what the money factor value is.

12

First… You need to understand how the MF is derived. Below is a refernce that provides some explanation…

Money Factor Derivation.pdf (202.5 KB)

Second- If you look at the early termination provision of any lease agreement, it reverences the implicit interest rate or the lease amortization rate called the constant yield rate or actuarial rate. I have many posts that reference how to compute the CYR used to amortize the lease. This is important in determining the lease balance at any point during the term of the lease. Below is an example of a lease amortization schedule…

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As you can see, the monthly rent (interest) charge and lease balance declines throughout the term of the lease. The lease balance converges to the residual value at lease end. The MF = .00050 and the CYR = 1.2081%. An estimate of the CYR is MF x 24.
So, .00050 x 24 = .01200 = 1.20000%. Some people erroneously compute the CYR = MF x 2400 which gives 1.2 = 120%. I think they know better but it’s pure slop.

EDIT: Here’s another reference
Money Factor Derivation 2.pdf (194.0 KB)

13

This is more of just a “units” problem.

Multiplying by 2400 simply gives the estimated value expressed as a percentage rather than a decimal.

14

I appreciate the clarification, and I understand that the money factor (MF) used in leasing is not a traditional interest rate, it is a simplified construct unique to leasing, designed to embed the averaging effect inherently.

My point was not to suggest there is more than one way to apply the MF in lease software, the industry standard is consistent in that regard:

Rent Charge = MFĂ—(Cap Cost+Residual)

However, from my perspective, there are two conceptual frameworks for understanding how this rent charge is derived.

The industry view uses a pre-scaled MF applied to the cap cost and residual sum. That MF is reduced (typically by half of the true interest rate) to simulate interest on the average balance without complicating dealer-side math or software.

The financial/accounting perspective applies a full interest rate or unadjusted MF to the average balance over the lease term, calculated as:

Rent Charge = RateĂ—((Cap Cost+Residual) /2)

This method aligns with amortization schedules, GAAP lease accounting, and financial auditing, and it can help reverse-engineer the true cost of capital in a lease.

If the MF is properly defined, both approaches yield the same rent charge, but they come from different disciplines: one prioritizes practical simplification, the other emphasizes analytical transparency.

So while there may be only one standardized way MF is handled in lease systems, it is still useful, especially for those with a finance or audit background, to distinguish between how the value is applied versus how it is derived. That distinction is where my earlier comments were coming from.

15

What?! It’s not a percentage. Amount x Interest rate = Percentage. 80 x 30% = 24. The percentage is 24 or the proportionate part of 80. The proportionate part of a given number is the percentage. To add some context, consider a class of 80 students. If 30% of the class are males, then 30% x 80 = 24 are males. So, if you were to ask what percentage of students in a class of 80 are males, you would respond with 24. So, when you claim that…

you’re a bit off. 2400 x .00050 = 1.2. Now, if you were to write…

2400 x .050% = 1.2 then the 1.2 is a percentage of 2400 just like 24 is a percentage of 80. In this instance, you would be correct. The only correct way to get an estimate of the CYR is 24 x MF which will give a decimal number that can be converted to a percent.

16

80 x .3 = 24

80 x 30% = 24

.3 is the value expressed as a decimal

30% is the same value expressed as a percent.

Yes, it would have been more grammatically accurate for me to have said expressed as a “percent” rather than as a “percentage”.

Multiplying by 2400 instead of 24 simply has the conversion to % already captured. It’s just doing it in a single operation instead of mutliplying by 24 to get a decimal and then 100 to convert to percent.

17

You may want to look at my posts here Money Factor-Interest Rate

18

Yup, and that’s incorrect. That isn’t a whole lot different than doing this…

96,916.50 + 66,153.30 = 163,069.80/2 = 81,534.90 * .00492 = $401.15

2400 x .00050 = 1.2… 1.2 is not gthe same as 1.2w%

Saying that…

2400 x .00050 = 1.2% and claiming that you’re doing it in one step instead of two steps is sloppy and non-senser. Why not just write 24 x .00050 = .012 and then, move the decimal point two places to the right and append the % sign? That’s the correct way to do it and, there are no shortcuts. No wonder good 'ole America the Great ranks 38th out of 72 countries in math.

19

Thanks for sending over the thread. It is a solid breakdown of how MF converts to APR, and I agree.

Our discussion diverged on how the rent charge is calculated. My concern is not with the MF itself, but with how many dealer systems apply it to the full cap cost instead of using the average cap cost and residual.

That difference can significantly inflate the rent charge and ultimately the monthly payment, which is why I have used the average balance method in my worksheets to model a more transparent lease.

Our back-and-forth helped clarify my thought process, so I appreciate the dialogue.

20

The MF is applied against the average balance using S/L depreciation. It is the midpoint between the adj. cap and the RV. Did you read the pdf I posted above? Let me re-post it…

Money Factor Derivation 2.pdf (194.0 KB)

It uses the trapezoidal rule. Outside of that, I don’t know wehat to tell you.

That is not what is happening. Again, it uses the average balance assuming S/L depreciation. So, it is strictly a linear relationship and does not overstate the interest charge. In fact, it’s slightly understated but the difference is negligible for leases. See the pdf.