WHAT ARE NORMAL
LEASE START UP COSTS ?
- FIRST MONTHS LEASE PAYMENT
- REFUNDABLE SECURITY DEPOSIT
(IF REQUIRED) USUALLY THE MONTHLY PAYMENT ROUNDED UP TO THE NEAREST $25 EXCEPT IN THE STATE OF NEW YORK WHICH HAS A $750 MAXIMUM
- DOWN PAYMENT
(AGREED TO BY THE CUSTOMER TO LOWER THE MONTHLY PAYMENT) NOTE: “DOWN PAYMENT” OR “MONEY DOWN” IS NOT THE SAME AS YOUR INCEPTION COSTS.
IT IS PART OF YOUR INCEPTION COSTS!
- MOTOR VEHICLE FEES
TITLE, REGISTRATION, PLATES, TIRE FEES, BATTERY FEES ALL CHARGED BY THE STATE DIVISION OF MOTORS VEHICLES.
- BANK FEE or AQUISITION FEE
CHARGED BY THE BANK OR LEASING COMPANY. TYPICALLY FROM $595 TO $895 DEPENDING ON THE BANK OR LEASE COMPANY.
NOTE: SOME DEALERS PUT THE BANK FEE INTO THE CAPITALIZED COST (SELLING PRICE OF THE VEHICLE) TO REDUCE THE INITIAL OUT OF POCKET EXPENSE.
- DEALER DOCUMENTARY FEEA DEALERSHIP FEE CHARGED TO THE CONSUMER THAT IS “OPTIONAL”. HOWEVER MOST DEALERSHIPS DO NOT MAKE IT OPTIONAL. THE CHARGE IS FOR PROCESSING OF THE PAPERWORK TO EXECUTE THE SALE AND GOING TO THE MOTOR VEHICLE AGENCY. THIS CHARGE CAN RANGE FROM $70 to $499.THE AVERAGE IS $170 to $199.
- SALES TAX or USE TAX
USE TAX IS COLLECTED BY THE STATE AT THE TIME OF REGISTRATION. USE TAX IS CALCULATED ON THE PORTION OF DEPRECIATION ASSOCIATED WITH A LEASE. AS SUCH, THE AMOUNT OF USE TAX IS TYPICALLY ABOUT HALF OF THE AMOUNT OF SALES TAX WHICH IS ASSOCIATED WITH PURCHASING THE VEHICLE. CUSTOMERS OFTEN ELECT TO PUT THE TAXES INTO THE CAPITALIZED COST (SELLING PRICE OF THE VEHICLE) TO REDUCE THE INITIAL OUT OF POCKET EXPENSE
EXAMPLE OF
LEASE INCEPTION COSTS
- $399.00 FIRST MONTHS LEASE PAYMENT
- $400.00 REFUNDABLE SECURITY DEPOSIT
- $1,500.00 DOWN PAYMENT
- $379.80 MOTOR VEHICLE FEES
- $12.50 TIRE FEE
- $10.00 BATTERY FEE
- $795.00 BANK FEE
- $199.00 DOCUMENTARY FEE
- $1,105.55 USE TAX (PAID UPFRONT)
- $4,800.85 = TOTAL INCEPTION COSTS
PLEASE NOTE: YOU CAN PUT ANY
OR ALL OF THESE COSTS INTO THE
CAPITALIZED COST (PRICE OF THE
VEHICLE) AND TAKE LESS MONEY
OUT OF YOUR POCKET OR EVEN
TAKE $0 ZERO OUT OF YOUR
POCKET.
HOWEVER, THE LESS YOU TAKE
OUT OF YOUR POCKET, THE MORE
THE MONTHLY LEASE PAYMENT
WILL GO UP.
SOMETIMES YOU WILL SEE
PROMOTIONS ON TELEVISION FOR
A SIGN & DRIVE EVENT!
THIS MEANS THAT THE
MANUFACTURER IS GIVING YOU:
- A FREE FIRST PAYMENT
- WAIVE SECURITY DEPOSIT
- NO MONEY DOWN PAYMENT
THIS TAKES CARE OF ITEMS
#1, #2 & 3
IN THE ABOVE EXAMPLE
HOWEVER,
YOU STILL HAVE TO PAY
ITEMS #4 THROUGH #9
WHICH TOTALS UP TO $2501.85
THIS IS A SIGN & DRIVE EVENT!
YOU CAN PUT ANY OR ALL OF THESE
FEES INTO THE MONTHLY PAYMENT
HOWEVER, IT WILL SHARPLY RAISE
THE MONTHLY PAYMENT!
