Correct. Positive equity on trade in. current lease being bought out.
I thought he said negative trade-in equity somewhere above. I must have been mistaken. Whether you include the trade equity or not, the payment is still way off. Something is missing. Geez, OP never posted the adjusted cap. This is why I really hesitate to analyze LH user posted data. Many times, it is inaccurate, or stuff is missing. I’d much rather see the dealer’s WS.
The Dealers workup has only what I’ve already included. I can save a pic and host it and paste it here if you want. Its not the intricate workup after sales writeup of course. I’m just talking tentative numbers with them at this point. and yep, I agree… the numbers are way off which is why I made this topic haha.
We can’t fix it. Need accurate data. Ask the dealer for his WS… the same one that he would send to the fund provider once the lease docs are signed. You’re basically asking for the same data. It should look something like this…
I will see what I can do.
Can you confirm if lease equity trade in is supposed to lower tax basis in NJ?
"The tax base CANT be reduced if the lessee
trades in leased or rented property for the credit, or if the lessor won’t hold the property for sale, lease, or rental. If the lease involves motor vehicles, the trade-in credit is only available if the lessor is a dealer of motor vehicles registered with both the New Jersey Motor Vehicle
Commission and the New Jersey Division of Taxation."
It appears that it does the way I’m reading it.
Also, in NJ of course, can dealerships chose which method they utilize? (total lease payments vs original purchase price). I assume they’ll be able to tell me which method they use.
My experience in NJ and trade ins for leases, equity is treated as cap cost reduction, hence taxed. Lowering of tax value is only for trading in for purchase.
You can trade in with a tax credit on a lease in NJ, but the vehicle you’re trading in can’t also be leased.
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Ahh okay, makes sense
Not what it says in the NJ lease tax guide linked above.
I copied the relevant text.
"Tax base cant be reduced if the lessee trades in lease or rented property. IF the lease involves motor vehicles, the trade-in credit is only available if the lessor is a dealer of motor vehcles registered with NJMVC and NJ Division of taxation (which I should assume most dealers are?) I might be reading that wrong…
Also, quick update. Dealership got back to me and it appears the discrepancy in payment calculation comes down to trade in equity / tax basis… It appears the calculator just assumes equity goes toward tax basis…
So that being said, should I then just qualify my equity as a downpayment to make it more accurate?
Yes, you should be applying your positive lease equity as a downpayment or a taxed incentive in the calculator. It functions the same as cash. You can also put it back in your pocket and not apply it all !! While this most likely solves the tax discrepancy, there is still a large gap with the calculated payment.
Yes, subject to certain conditions. To wit…
Note that Options I and II are negotiable. I would insist on the cheapest option. In many cases, it is option II.
This is making my brain hurt. how in the heck does the “total of lease payment” method work? My base lease payment calculation already includes capitalized fees… why would I need my total lease payment and then add the fees back in again?
Isn’t the entire thing recursive? Fees and tax are both capitalized costs, yet you need the tax calculation to figure out your actual capitalized cost.
I must be missing something.
I added their latest workup to the OG post.
Total Lease Payments = Sum of monthly base payments + fees paid upfront + any CCR
This gives the taxable base upon which tax is levied. Fees paid upfront are not capped in the lease. The example given is piss poor and so is the text.
This isn’t the issue. That was the first thing I did. I got the cost calculation close to what the dealer said, but I’m still off by $35/mo
agreed. I’m realizing that now too. it made it a bit closer but still off. Something isn’t adding up which is why I created this thread.
See my first post again, they updated the numbers slightly but its still off. I added a picture of their workup. It is a very basic proposal so it very well could be that when they run the real numbers… they change. But hard to say.
Are you set on getting this car if they match the deal in your calculator? If so, text me, I am going to help you out, I want to try something…
I’m just information gathering… but truth be told, I need to make a decision on buying out my lease or applying it towards… something. This is one car of 3 I’ve been poking around on.
This is a base wrx and they are already about 500ish under invoice on it. I am close to going in and doing final talks with them on it. My calculator isn’t my proposal, its just takign all their already provided numbers, yet the monthly payment calculated is off… I’m just not sure why. makes me feel like they are hiding something. I dont want to find out about potential shady dealer shit as I’m about to sign on the dotted line.
Who cares what they’re hiding or how they get there, just figure out a target deal that is possible and/or reasonable and shoot for that, it’s on them if to justify it however they do their math.
I had a dealer “accept” a deal that due to their insane fees probably needed 3-4% extra discount just to match a more reasonable deal from a dealer with less fees, they cried and complained that they were losing money, to which I reminded them that their $1,800 in fees was profit, and eventually, they took the deal. Point being, we can get into the weeds on the math, and knowing how it works is good, but ultimately, the LH calc works well for NJ, so just pick a reasonable/possible target deal, shoot for it, and see if you can get it.