Was about to execute a one pay on a new Mazda but at the last minute found out that the dealer and their Mazda rep are insisting that the contract couldn’t be structured with the Mazda lease incentives as a cap cost reduction, but rather had to come in as a non cash rebate to pay for the deal. This ends up making a difference in the total lease cost since the rent charge and taxes are applied to the larger depreciation compared to the case where the incentives applied as cap cost reduction. The weird thing is that for a regular monthly lease, the claim is that it can indeed be used towards cap cost. Curious if others who did Mazda one pays on cx70/90 phevs also had this situation.
In fact, it’s cheaper to do a regular monthly lease with MSDs where the incentives reduce cap cost than the one pay where they’re applied as non cash payment. There’s no incentive for a one pay if it’s indeed not possible to apply toward cap cost. Just hoping some folks who did one pay leases on a Mazda could chime in, because if they got a cap cost reduction I’d like to know how and try to replicate.
Sounds like a pile of BS to me. There is no reason why the single pay lease can’t be structured with rebates used as a CCR. Not only is it mathematically possible, but it is also optimal that results in a minimum cost lease MSD’s aside. There should be a single pay money factor discount as well as a monthly pay money factor discount with MSD’s. So, it may become a little murky as to which one is cheaper. The bet here is that the single pay wins out IF you can get the MF discount. Not sure if fund providers will do MSD’s with a single pay lease but here is how it might work…
Fund providers may have two money factor (MF) tracks or a layered approach for money factor adjustments in a single-pay lease with refundable multiple security deposits (MSDs). Below is my best shot that seems to make the most sense…
MSD-Adjusted Money Factor : This determines what your monthly lease payment would have been had you not prepaid your lease. An MSD discounted MF is used to compute the discounted monthly payment. The only purpose of this payment is to calculate each security deposit and reflects the reduced financing cost due to upfront refundable MSDs. Or it’s possible that the MSD will be based on the MF before the discount is applied. At any rate, it’s refundable.
Single Pay-Adjusted Money Factor : This discounted MF is distinctly separate from that described above and is strictly used to incentivize customers and to capture the time value of money (TVM) as the fund provider receives all payments upfront. The discounted MF is used to compute the discounted monthly payment (P), which, in turn, is used to compute the single-payment lease amount = NP where N is the lease term.
And so, a single-pay lease with MSDs may involve two distinct MF calculations that serve two different purposes. Those interested should check with their fund provider.
I agree completely that it makes no sense that they can’t structure it that way - they say that they tried applying it as CCR but it kept bouncing with errors and then their Mazda financial rep explained that it can’t be done for 1 pay. I asked for evidence of that and they sent over guidelines that look like they come from Mazda financial services that say CCR is not allowed on 1 pay. It’s just surprising that this would be the case because I’ve seen signed 1 pay leases on this forum, which I assume only make sense with the CCR structure.
MA. Rebates aren’t taxed here. But they say that it’s not that they didn’t try but after spending hours getting errors, the explanation they have in black and white from MFS is that CCR isn’t permitted for 1 pay.
I always structure single pay leases using the rebate as a CCR in my lease proposals that I create for those interested. Never had a problem with GMF, Honda, Kia, etc.
OP – Are you familiar with how Mazda (TFS) handles one-pay leases in event of total loss OR if you decide to trade in your lease early?
Not trying to sway you, but in case Mazda refuses to fund the 1P option, the difference in MSD option isn’t that terrible ($672 over course of the lease). IF it ends up providing you more optionality (depending on how they handle 1P lease refunds), it may not be a bad idea to just go the MSD option anyway.
Actually, I’m not. Does TFS include GAP in their lease? And what’s the difference between totaling with one pay or otherwise? I assume if there’s GAP coverage then I’d be refunded the remaining payments on a one pay vs not having to pay the rest in a regular lease?
TFS (and thus Mazda) do not include GAP in their leases. GAP covers the difference between what insurance pays out AND lease buyout price, ensuring you do not pay for any delta. However, this doesn’t cover what you’ve already put down during signing (part of the reason why its mostly not recommended to put down large sums of cash on a lease).
There are no “Remaning payments” to be refunded on a one pay lease, as you’ve paid everything up front. However, some captive banks (e.g. GM) give prorated refunds (e.g. refund any “unused” portion of the lease). So you would have to find out from Mazda financial how they handle one-pays in the event of:
OP might want to ask same question of how MSDs are handled in that situation. I think there was an example of MB financial using the MSDs in a total loss.
GAP has no mechanism to return cash to a consumer. It just protects you from being liable for the negative delta (between insurance payout and the balance owed).
Total loss and any OPL prorated refund would be in the contract somewhere
I guess this sort of got side tracked into a discussion on the one pay vs standard lease tradeoffs. I understand that there may be nuances with how money you give to TFS up front may be returned or not returned in the event of total loss and early termination.
My main concern was on the application of lease incentives as cap cost reduction on one pays. There were a number of these done on this forum and the information i received from TFS via the dealership was that it cannot be used as CCR for one pays where it can be used on standard leases. It seems to me that this is in some sense forcing the customer to pay tax on the incentives in a state that doesnt tax incentives. I’m not sure why TFS is doing this and if theyre honestly even allowed to.
