I’m going to provide an extensive analysis. Here we go…
Sales tax on EV’s in NJ are being phased out. The NJ sales tax rate through June 2025 is 3.3125% and is levied on the sum of the base payments which exclude capitalized sales tax and gov. fees such as title/registration/license (i.e., excludes non-taxable fees).
So, let’s work through the dealer’s worksheet (WS) and do the math manually. To begin, organize all the relevant data in tabular format as follows…
*Dealer WS excludes the 545.81 sales tax in their Gross Cap… I included it for reasons that will become clear.
Next, compute the taxable base payment…
Net Cap (excluding non-taxable capped tax and capped gov fees)
50192.15 – 941.34 – 545.81 = 48705.00
Compute the Base Payment excluding non-taxable capped fees
Base Pay = .00040 x (48705.00 + 33111.50) + (48705.00 - 33111.50) / 27 = 610.27
Sales Tax = 3.3125% x 27 x 610.27 = 545.81. It appears that the entire 941.34 is non-taxable.
Now, compute the base payment including capped non-taxable fees…
Base Pay = .00040 x (50192.15 + 33111.50) + (50192.15 - 33111.50) / 27 = 665.94
NOTE: Strictly speaking, the single pay is NOT 6739.38 as the dealer has claimed.
You cannot add a fee (259), as the dealer did, and call the sum the single pay amount unless the fund provider dictates otherwise which would be foolish IMO. If the 259 is capped, then it will be embedded in the single payment. That’s fine as it is financed. Therefore, it is “in bounds” so to speak. If paid upfront, however, it is “out-of-bounds”. If you wish to execute your purchase option at some point during the lease, the adjusted lease balance, used to determine the buyout amount (see lease agreement), will be inaccurate if the 6739.38 is treated as the single pay amount instead of 6480.38.
Suppose the 259 reflects tax. You must exclude non-capped tax when computing the adjusted lease balance. To solidify my point, consider a traditional monthly payment lease where the monthly base pay = 600. If the tax rate is 7%, then the monthly payment is 642. Which payment should be used to amortize the lease… 600 or 642? Which one makes more sense? Of course it’s 600. Upfront fees or “tacked on” fees should never be included in the single payment amount whether they’re taxable or non-taxable.
The single pay amount is the sum of the base payments, which include capped taxable and non-taxable fees, less applicable rebates… PERIOD! Don’t contaminate it by adding miscellaneous fees.
I would have structured this lease much differently than the dealer did. Why is the dealer capitalizing fees if the lease is a single pay lease? All capped items are subject to a finance charge. Also, I would have used the 11500 rebates as a CCR instead of deducting it upfront at lease inception. Long story short, the lease inception fees should be as tabled below…
*Tax = 3.3125% x (3973.59 + 11500.00) = 512.56
Lease structure means everything! You save 154.07.
For what it’s worth…
Don’t waste time trying to decipher a dealer’s worksheet or chasing after them. Otherwise, you’re allowing them to control the deal. They often omit a lot of relevant detail such as money factor, monthly base payment, monthly contractual payment, fees not itemized and even make mistakes. You need to rely on credible outside sources (e.g., LH marketplace and signed deals, Edmunds, etc.). Do your own research and establish a reasonable selling price in your market. Be sure to get a copy of the factory window sticker. Check for non-factory add-ons or dealer-installed options. And, if possible, eliminate those you don’t need or want. Get a list of all customer and dealer rebates/incentives including VIN#-specific discounts/incentives, if any. And, yes, the dealer has such a list.
The only useful thing about dealer lease worksheets is the input data (bolded items). 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 in tabular format 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 and email it to the sales manager (SM), not a floor salesperson as they’re often Mickey D order takers and lack knowledge. All numbers should 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.
