I received a quote with acquisition/bank fee and taxes rolled into cap cost. I asked for a redo with taxes and fees paid upfront. The new quote has taxes and fees still contributing to “Vehicle Total”, but with their value subtracted as Capital cost reduction. Is that the norm?
Some made-up numbers to clarify the calculation:
Vehicle MSRP: 30000
Cash sale price: 25000
Fee 500
tax 500
Vehicle Total: 26000
Capital cost reduction 1000
Adj Cap cost: 25000
(I promise I did try to search the forum for similar discussions, “taxes” “upfront” “Capital cost reduction” are noisy terms to search for)
Usually when you pay those fees upfront they aren’t taxed, if you roll them in then you pay tax monthly since it’s part of the cap cost. But being in NJ they are paid upfront or rolled in, but then you’re paying interest on the taxes. I’m not sure if any of that makes sense, but regardless you’ll pay ALL the tax and it doesn’t really matter what way you structure it, I’d suggest rolling everything in, that way if you total the car tomorrow, you’re not out the cash
Thank you, the part that was confusing to me was including them in the vehicle price and then showing the payment as capital cost reduction.
Does rolling in fees to cap cost, specifically bank acquisition fee, mean higher money factor than if you were just to pay it upfront? Is there some law that says the money factor will ga e to be higher if you roll in the bank fee to cap cost?
No. That doesn’t make sense. Obviously, whatever you cap, will be charged ‘rent’ based on the MF.
Ok that’s what I thought; these shady dealerships I swear🙄. Thank you!
Just a suggestion/tip: find a way to work in that you COULD put money down but you CHOOSE not to because one major point of leasing is to push all the risk onto the bank.
Sometimes sales people act like sign and drivers are broke. I could write a check for the car, and if there is free money (eg in May, Ford had an incentive where they matched $1,000 down payment $ for $), I’m in. But I am not paying anything to lower the payment. See any post here about cars being totaled in first week/month.
I know this is an old thread, but I am running into the same scenario. I am new to this so not sure I understand all the lingo above. I am currently working on a deal after reading all the intro material. I told the dealer I wanted no down payments and wanted to pays fees & associated taxes for the fees up front (I’m in CT). The dealership is structuring the deal so that everything was rolled into the cap, and then sum of all the fees & even initial payment is classified is a down payment to pay down that cap. I tried it both ways in the calculator (with fees paid separately and $0 down, and then as they have structured it) and it seems like it basically works out even with about $20 difference between the two. Am I overlooking any downside?
Here’s my calculator using verified sale price, MF, residual values i got from the dealer (i had to estimate dealer fees slightly to make math line up)
Seems like the advice above is my best move is to roll everything in as they suggested, but then request no cap reduction and pay higher monthlies (to minimize risk of a loss as much as possible). Am I understanding all that correctly?
There’s essentially no difference between paying the fees up front with no cap reduction and capitalizing all the fees and then paying a cap reduction equivalent to the fee amount, other than in a few states where that makes a difference from a taxation stand point.
