Hello! This is my first time trying to lease a car, though I’ve been lurking here on and off for a few years.
I am trying my best to replicate the numbers a WA dealer quoted me on a Kia EV6 GT, but either I don’t have enough detail in the quote or I am missing something.
Here are the numbers I was provided (looking at 36 month lease):
Here is my first attempt. I rolled admin fee, purchase option fee, and doc fee into the dealer fees and then tried to adjust the down payment to make the DAS number match.
After that, I signed up for RateFindr and tried again: second attempt. For this one, I kind of ignored everything in the quote and just used what rate findr filled in. The monthly payment ended up closer.
More than evaluating this specific deal (though I am happy to hear opinions on it), I’m trying to learn how to do this so I can better evaluate future deals. What am I doing wrong?
You get hit with the purchase option fee or disposition fee at lease end, depending on if you purchase or not. Who knows why they show these both. Neither get captured in the lease payments.
Beyond that, your incentives are most likely taxed.
Thanks for the response. Moving the incentive into taxable helps close some of the gap. I also didn’t know that purchase/disposition fees were one or the other.
Thanks for the advice and a specific target. I’ll will definitely go back to them and ask for a dealer discount.
I didn’t really like the offer (compared to what I have read about around here) but I was trying to use the calculator to better learn how to evaluate it.
Forget the calculator and learn how to manually do the calculations. Once you understand the math, then use the calculator. I never allowed my students to use calculators unless I was certain that they understood the math. Even so, they still had to show all their work. No work = No credit was my standard proclamation on very quiz/exam. All online calculators have their weaknesses although, the LH Calc is the best I’ve seen.
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 fees or not itemizing them and even make mistakes. For instance, I have no idea how they arrive at taxes of 1786.99. The closest I can get is …
8.7% x (19000 + 650 + 200) = 1726.95… $60 of taxable fees is missing. Also, don’t have any idea how they arrived at a net cap of 44019.85 unless they used a portion of the 5000 cash as a cap reduction… but 890.15 is a large gap. If that’s a cap reduction in addition to the 19000 rebate, it throws off the taxes. This leads me to ask why would you pay 5000 cash given a 19000 rebate? YIKES! You shouldn’t pay anything out of pocket. The dealer is offering zero discount… that’s horse shit. Move on.
The only thing useful about dealer lease worksheets is the input data. 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.
For the last lease I was trying to get, the salesperson and I couldn’t figure out why our monthly payments were so far off. He ended up adding the F&I person to the email thread so we could figure out why we were coming up with different values.
I put in the email your formula and filled in the independent variables so they spit out the same after-tax monthly payment as the LH calculator.
(
(MF x (Adj. Cap + Residual)) +
((Adj. Cap – Residual)/Months)
)
x 1.0875 for taxes
The F&I guy calls me up and says “What in the world are you doing typing math formulas in an email to a salesperson? They can’t do math. That’s why they’re in sales.”
@IAC_Scott is probably the only salesperson that is also good at math.
PS, the reason we were off was that when the ELead sheet says “customer cash down” that was actually the DAS amount, and not a capital cost reduction down payment.
Message received! I was a math major in undergrad, so I know (or should know) to show my work.
Your response does at least confirm that I wasn’t missing something about their numbers. They don’t make sense to me either, but I just figured I didn’t understand something.
Thanks for the advice. I clearly need to do some more reading and research about the whole process… and then make my own spreadsheet to track it all.
WOW! Music to my ears. All the formulas can be derived and only requires HS algebra. You’re more than capable of creating a professional-looking error-free one-page lease proposal like the one below…
It speaks volumes about you. Dealers will know that you’re very knowledgeable about leasing. They’ll put their toys and game boards away and will get down to business.
Just make sure to email your proposal to the sales manager (SM), not a floor salesperson as they’re often Mickey D order takers and lack knowledge as @holeydonut would enthusiastically agree. 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!
Ok, this is amazing. I haven’t seen it all laid out this way. I’m going to use this structure to try and lay out a deal for a Mach E (which is the vehicle I’m most interested in).
Just collect and vet all data. Remember, FMC uses an interest rate, not a money factor assuming they are the fund provider. Your lease proposal will look different than mine. WA taxes the individual base payments. I’m in Ohio where the sum of the base payments is taxed. I would split the rebate in two ways… part will be used as a cap reduction and the balance used to exactly cover all upfront fees.
