LH Calculator and how to use it

One of the more common posts we see here are from people trying to utilize the LH Calculator and struggling to get the correct numbers. More often than not, this is the result of user error, so let this be a guide on how to use the calculator and what values go where.

With that said, a few starting notes. Read these 3 times before continuing:

  • The calculator is not perfect, there are some limitations in how things are calculated.
  • Do not expect to match an offer perfectly. There are often differences in how things are taxed or exactly how money is applied, so the numbers you’re getting are close approximations. A few hundred dollars of variation in total lease cost can happen.
  • Details are important. If you don’t know a value, find it out.
  • The numbers that are in the calculator to start with are DEFAULT values. You can not use them in lieu of the actual numbers and expect to get a worthwhile answer.

We will start by going through the items in the calculator line by line to better understand what each input is. This will be followed by a couple of examples.

Ok, let’s go.

When you open the calculator, you are greeted by this DEFAULT template.


General Information
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Make
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This drop down menu lets you select which brand of vehicle is in question. This will provide some extra options down below for certain vehicles, like security deposits (and amounts), one pay leases, and auto populate the acquisition fee based on baseline prices.

MSRP
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This is the manufacturer suggested retail price for the vehicle. It is on the window sticker. This is the price before any discounts, mark ups, dealer add ons, accessories, or non-residualized items. In rare occasionas, residualized items are added to this value. The calculator will use this and the residual percentage below to calculate the residual value.

Selling Price
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This is the selling price of the vehicle, before incentives. This the negotiated price of the vehice, pre-incentive, with any non-residualized items added on (accessories, wear and tear, etc). Dealers very often quote discounts that include incentives. Be sure to separate them out. A common error is to list a selling price here that includes incentives and add the incentives later in the calculator.

If you have a trade-in or are rolling in payments from a lease, add or subtract that from the selling price.

If you input a selling price, the % discount will automatically adjust. If you input a % discount, the selling price will automatically adjust.


Lease Numbers
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This section includes the basic lease terms. These are generally available from the forums on edmunds.com specific to the year, make, and model of your vehicle. Be sure that you personally have asked for this information in your zip code. A very common error is using out of date information or information from a different region. Do not find someone that posted asking and use this. Get the information for yourself.

Months
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This is the number of months of the lease term. Update this value to reflect the term you’re calculating.

Miles per Year
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This has limited value in the calculator. If you enter a residual value in the next section and then change the miles per year value, it will automatically adjust the residual value based on the difference in miles per year. When used properly, if you plug in the correct miles per year and then the corresponding residual value, you can quickly compare leases across different mileage limits by changing this value.

Residual Value
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This is the value of the vehicle at the end of the lease term. It is critical that you plug in the correct residual value for the months and miles per year above. The dollar value amount will auto calculate.

Money Factor
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This is the money factor, before MSDs, that the dealer is charging you. This is a value that is often marked up above buy rate, the number provided by the bank/edmunds. It is incredibly common for people to either assume the dealer is charging a non-marked up mf here or to enter the value after MSDs.

Extra Options
Depending on what vehicle make you selected at the top, you may see extra options here. These will become automatically available as applicable.

Demo Car Mileage
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Generally, loaner/demo vehicles have a penalty charged to them based on their mileage. If you input the mileage here, the residual value will be automatically adjusted based on the mileage. You should use the new vehicle percentage above and enter the mileage here to automatically calculate.

This is not available for all brands. Volvo, for example, does not currently have this adjustment. If you’re calculated a demo on a vehicle that does not have this option in the calculator, add the residual value penalty amount to the selling price.

Multiple Security Deposits
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If the brand allows for MSDs, you can enter the desired amount here. This will automatically limit you to the most amount allowed by the manufacturer and apply the appropriate MF mark down to the value for MF entered above. This is why you must enter the pre-MSD MF above. The calculator will not, however, prevent you from selecting more MSDs than are allowed on a vehicle with a very low starting MF. It will output the new MF
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and warn you if you’ve selected too many.

Acquisition Fee Waiver/One Pay
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When available, selecting one of these will auto adjust your MF to account for a one pay lease or an acquisition fee waiver.


Capital Cost Adjustment
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Down Payment
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Pay particular attention to this section This is a major source of error when using the calculator and a major source of confusion in general. It is critical that we delineate the difference between Down Payment and Due at Sale/Drive Off. Your Due at Sale/Drive Off amount is the out of pocket amount you pay when you sign the lease. This may include first month’s payment, taxes, fees, or capital cost reductions/down payments. This amount will be displayed later. Your Down Payment amount is an additional capital cost reduction. Different dealers calculate the due at sale amount differently. Sometimes they cover fees but taxes are rolled into the monthly payment. Sometimes the fees are rolled in and taxes aren’t. Long story short, the number in this section is UNLIKELY to match what actually ends up on the contract. Instead, as a work around to account for differences in how the dealers calculate, we adjust this value to make the Due at Sale/Drive Off amount closely match. One of the most common errors in using the calculator is a user who inputs the due at sale/drive off amount in the down payment section.

Again, the actual value inputted here does not matter. Adjust this (positive or negative) to make the Due at Sale/Drive Off value match the offer.

Incentives
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Earlier, you made sure to separate the pre-incentive discount from the incentives. Here is where they go back in. Be sure that you have independently verified the incentive amounts. Dealers often are not forthcoming about how their discounts are broken up. Edmunds should have provided this data when you asked for RV and MF. If an incentive is taxed or not will vary depending on what kind of incentive and your state. Generally if it’s a direct to dealer incentive (dealer cash, etc), it is untaxed and if it’s direct to you (rebates, lease cash, loyalty, conquest) it is taxed. This only applies for incentives that occur at the time of sale. Post-sale rebates are applied later.

Zero Drive-Off
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Selecting this box will change your drive off amount to zero. This is a “sign and drive” or $0 das lease. Everything, including the first month’s payment is rolled in. You don’t pay anything until the second month.


Fees, Taxes, and Rebates

Acquisition Fee
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This is the acquisition or lease origination fee. When you selected the make at the top, this was autopopulated with the default value for that brand. Some brands have different prices per vehicle, some dealers (very common with Mercedes and Volvo) mark this up nominal amount, and this will be wrong if you’re using a non-captive bank. Adjust accordingly. Do note that often dealers do not mention this amount as part of their general fee breakdown when asked about costs. More often than not, when a dealer itemizes fees it is only dealer fees and tax/title/license fees.

The upfront box simply adds this in to the drive-off amount and can be ignored if you’re adjusting the down payment value to match a drive-off number.

Dealer Fees
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This is generally the dealer doc fee.

Government Fees
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This is your license, registration, smog, tire, other misc fees. Ultimately, any itemized fees other than the acquisition, disposition, or taxes need to be captured either here or in the dealer fees section. It doesn’t much matter, as long as they’re in one of these two.

Post-sale Rebates
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This is for rebates that occur after the sale. Times when you receive a tax credit or a check back. This does not change the monthly payment but does change the total lease cost.

Sales Tax
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This is your local sales tax rate based on your registration address. It doesn’t matter where the dealer is located. In rare instances (the city of Chicago, for example) where there are additional taxes above the sales tax rate that are applied separately. Those should be added to the selling price, but are beyond the scope of this FAQ. In some areas, there is a different sales tax rate for leases than general purchases. Be sure you’re using the correct value.

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Some states apply taxes in odd ways. These are the most common, but if you’re in a state that does things differently, it may be better to add the tax amount to the sales price. This doesn’t list places like Texas, that have very odd tax structures for lease or include places that have personal property tax amounts. Always best to verify the tax situation separately from the calculator.


Outputs


Here we see what the lease actually costs.

Monthly Payment
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This is the payment, before and after sales tax. In states where sales tax is charged upfront, these may be the same value. Be sure when looking at a dealer offer which number they’re referring to.

Drive-Off
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Pay particular attention to this section. This value not approximately matching the deal is one of, if not the most, common mistakes when using the calculator. This is your due at sale/drive off amount. How much you are paying in cash when you take delivery. The down payment amount should be adjusted to make this value match. The breakdown of what the drive-off is made up of may not match the dealer offer. That is ok. It’s the total amount that matters. Note that this does not include any rebate amounts. Dealer offers/contracts often display a drive-off that includes rebates. This is only the CASH due at sale.

MSD Payment
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If you’re applying MSDs, this is the amount due, in addition to the drive-off amount. It is not uncommon for this number to vary slightly from the dealer amount, depending on if the per MSD amount (1 monthly payment’s worth, rounded up) is calculated before or after MSDs are applied.

Disposition Fee
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This is the amount due when you turn the vehicle in and is auto populated when you select the vehicle make. The value is used for calculating the total lease cost.

Total Lease Cost
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This is perhaps the most important output; the total cost of all the monthly payments, drive-offs, and disposition fee.

Leasehackr Score
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This is the lease important output. This has very limited utility in evaluating a deal except for in very specific circumstances. If you’re reading this FAQ, ignore this value.


Share your numbers
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Finally, if you want to share/post up your calculator for review, click the share your numbers button and copy the link it generates here. When opened, this will display your fully populated calculator. If you copy the url at the top of you window, it will not display the populated calculator.

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Thanks for taking the time!

Thank you!! We never had a FAQ for the calculator?? Amazing

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Right? Hopefully this will help. I’m planning to follow up with a few examples of actually using it based on a dealer contract and a dealer offer.

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Holy FAQ Batman!.. it took me a while just to scroll down to the like button

Next FAQ—-

Dissecting the lines of a lease contract :memo:

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Wish I can like this more than once. Stellar job, Matt!

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Boom! Knew I nominated you for the right reasons :wink:

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I think I will add a walk through plugging the lease contract from the 101 in. Does anyone have a good dealer lease sheet to use as an example as well?

I made that months ago silly :squid:

@mllcb42 this is WAY better than what I had in my head. You earned your stripes :+1:

One suggestion - a disclaimer that the calculation rarely matches exactly to the penny and should not be used as a negotiation tool in any way. It is not desking software or a full lease calculation spreadsheet.

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I tried to cover that in the notes at the top

From the top:

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Clearly I skipped over that :rofl: :+1:

You mean you didn’t read the whole thing? blasphemy!

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Plugging a contract into the calculator
Next, let’s look at an example contract and plugging it in to the calculator. For this example contract, let’s use the contract from Leasehacking 101: A guide to reading a lease contract


The goal here is to show a few different things:

  • How to translate a contract to the calculator
  • How the results from the calculator may not match the contract perfect
  • How taxes may be calculated differently

Note that this is not the ONLY way to fill this out. Some values (such as trade equity) are handled differently here than how some others may choose to do so.


Here is the contract provided with some key information highlighted:


A few important notes:

  • In some states, lease contracts do not show the MSRP
  • Contracts typically state total “rent charge” amount, rather than money factor
  • The contract may not say the sales tax percentage
  • Due at sale amounts may not be all in cash, they often include trade equity or rebates. How these non-cash amounts are taxed varies by state.

Basic lease terms
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We’re looking at a lease contract for a Mini, that is a 36 month term, with a monthly payment of $355.82, a positive trade equity of $3000, and a total due at sale of $4768.91.

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Of that $4768.91, $3000 is positive trade equity and $1768.91 is cash due at sale.

As such, we would expect a calculator that matches perfectly to output $355.82 per month and $1768.91 due at sale

So let’s start filling this out.


The default values:
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Make
Now, make is easy. This is a
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MSRP
MSRP is easy if you know it. In this case, we don’t. If you know the actual MSRP put it here. Remember from earlier that the MSRP value listed is only used by the calculator to calculate residual value based on the percentage input. In this case, the contract provides a residual value dollar value rather than a percent of MSRP. We need to make sure that residual dollar value is correct.

As such, I will put the Residual Value here and then later, say the residual value is 100%.

RV is image ,
so
image If you know the actual MSRP, put it here

Selling Price
Selling price is the agreed on value + any non-residualized extras - any trade equity (positive or negative)
The agreed on value is image
The trade value is image

As this is positive trade equity, we subtract it from the agreed on value. $35304-$3000=$32304
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Note that the percent off MSRP is a ridiculous number as we didn’t include the actual MSRP.

Thus, the whole section should look like this:

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Lease Terms

Term
From the contract, we know that this is a 36 month lease
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Miles per Year
and that it is 10k miles per year
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36,000 miles / 3 years = 10,000 miles per year

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Residual Value
From the contract, we know that the residual value is
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Now, the calculator doesn’t allow us to enter a dollar value for RV, only a percent. Because we set the MSRP above to $24180, if we plug in 100% here, the correct RV will be displayed. If you input the correct MSRP and the correct RV, it would also display $24180 here. As we don’t know those values, we couldn’t. If you know the correct RV and entered the correct MSRP above, use the correct RV here
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Money Factor
Now, the contract does not display money factor. Instead, it gives us the total rent charge, so we will need to calculate the MF.

From the other Leasing 101 sections, recall that:

MF=(Total rent charge/term)/(adjusted cap cost+residual value)
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In this case, MF= (3012.79/36)/(33138.65+24180.00)=.00146
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We don’t have any MSDs being applied or special circumstances, so that ends this section.


Cap Cost Adjustment
Here we have no incentives, so the taxed and untaxed incentives are left blank.

We will re-visit the down payment amount to adjust our due at sale amount later, so let’s leave this at $0 for the time being.

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Fees, Taxes, and Rebates

Note that on the contract, the fees may be found in two different places;
either the due at signing section
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or the cap cost section
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Acquisition Fee
Because we selected Mini as the make, the acquisition fee was auto-populated at $925. One should always verify with the contract, however, to be sure the correct value is here. Some brands have different values depending on the vehicle (Hyundai, for example, charges $595 on less expensive vehicle and $650 on vehicles over $40k) and some dealers mark up the acquisition fee.
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Dealer Fees
This is typically just the dealer doc fee. It isn’t particularly important if a fee is added to the dealer fees section or the gov fee section, as long as it is captured. The sales tax numbers in these sections are ignored as they’re automatically calculated by the calculator.

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Government Fees
Here we’ll end up summing a bunch of small fees, as well as title, and registration.
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Total fees = 199.38+175.00+2.00+66.50 = 442.88
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Sales Tax
As the sales tax percentage isn’t displayed on the contract, we will need to calculate it.

Sales tax percentage = ((monthly after tax/monthly before tax)-1)*100=((355.82/332.54)-1)*100=7%
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Finally, this contract is from Florida where tax is applied to the monthly payment
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With that all input, the calculator will output the following information:

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Notice, that $361 per month with $1658 due at sale doesn’t quite match the $355.82 per month and $1768.91 due at sale we were expecting.

The monthly payment is higher but the due at sale is lower. We can tweak our down payment amount in the cap cost section to bring this closer to matching. Personally, I prefer to adjust the this value so that the monthly payments match. By changing the down payment amount, you’re essentially moving money away from the monthly section and to the drive-off section. You’re not making a significant change in overall cost, just changing from one bucket of money to the other.

If we add $150 to our down payment
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The output will change
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We’re now at $356 per month with $1814 due at sale. This is much closer to the $355.82 per month with $1768.91 we were expecting. There is essentially $45 up front difference in the calculator vs the lease contract. A small discrepancy is to be expected here. The calculator is not perfect and how taxes and such are calculated varies

Some of this difference can be seen in what the calculator shows for upfront taxes:
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compared to what is on the lease contract
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What is important, however, is that the numbers come out fairly close. You’re looking for large errors here. You can not use the calculator to perfectly account for every single dollar.


For reference, here is the completed calculator:

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As an alternative, one could handle the trade in equity differently. You could choose not to put that value in the sales price and instead treat it just like cash. If we were to do that, we would expect to see an output of $355.82 per month with $4768.91 due at sale.

If we change the sales price accordingly
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with $0 in the down payment, the output is
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Note that there is a very large difference in monthly and drive-off here.
This is a very common error when people use the calculator. They plug in the values and the drive-off is off by thousands. As such, the monthly is incredibly different and they think they’re being charged more. You must adjust the down payment amount to make either the monthly or drive-off match

By changing the down payment to $3150, we get the monthly just about right
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We have a drive off now of $5024 compared to the $4768.91 we were expecting. The $45 difference we had has grown to $255. In this case, because of the sales tax being applied to the trade equity that wasn’t being applied before. In different states, sales tax on trade equity is treated differently. Florida appears to not tax the trade equity.

The next example I plan on doing is a dealer lease sheet. Does anyone have any requests of what they’d like to see worked through?

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I would love to see one, so I can follow through

For another example, let’s take a look at this offering from a dealer on a 2020 Volvo XC40. This time, there’s a particularly interesting tax complication as the deal at hand is in Chicago. The city of Chicago charges an additional use tax on top of the Illinois sales tax, so this deal doesn’t fit in under the normal state tax options in the calculator.

Here’s the information provided by the dealer:
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First section is fairly self explanatory
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Vehicle is volvo, MSRP is as listed, and there is nothing extra being added in to the selling price as listed.


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The lease terms are also fairly cut and dry.

We can, however, use this as a good example of how the miles per year button works. Notice how the dealer quote lists the residual value as a base rate of 54% and then adjusted 4% for the 7500 miles?

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The same could be done in the calculator by inputting the base rate at 15000 miles
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and changing the mileage selection to 7500.
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Again we start with the downpayment set to $0.

Incentives added as listed in the deal sheet.

If you independently verified the incentives and found that the dealer had rolled some of the incentives into the dealer discount, you’d want to separate them out here and make sure the sales price was adjusted accordingly.


Taxes and fees are the interesting one on this deal, particularly the government fees
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Acquisition fee is as listed.
Dealer fees consist of the dealer doc fee.
Government fees are the sum of the extra fees:

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as well as the Chicago tax
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9% sales tax is ALSO applied to the monthly payment
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(Don’t live in Chicago if you ever want to lease a vehicle)


As a result, the calculator outputs
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This is a good bit off of the $507.87/mo with $808.87 drive-off that the quote offered.

Never fear… when the drive-off amount differs, we can adjust the down payment figure to shift money from the drive-off to the monthly. In this case, with a little trial and error, changing the down payment amount to:
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changes the output to just about perfect
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