Hello,

I have received a base quote for a 2004 Infiniti G35 Coupe. The dealer has now added some $3,000 extra to the 'final' price for destination fee, documentation fee, DMV fee, and tax. Is the final price after all these increases the "selling price" that I enter on your calculator? How is the tax handled in NJ? Is a tax of $2,650.89 correct on a 39-month lease?

I want to give them a final say by week's end, so any help would be greatly appreciated.

Thank you,
Jacob

The tax on a NJ is based on the depreciation amount, not the cost of the vehicle. You can figure this by using the purchase price as the cap cost to get a lease quote. Then, under the disclosure page take the Residual Value amount and subtract that from the MSRP. This is the amount that your sales tax is based upon. Multiply this amount by your tax rate. You can pay it up front or add it into the cap cost of the lease.

-Tarry Shebesta
www.LeaseCompare.com Forum Moderator

I have talked to a few dealerships here in NJ, and they are all telling me that sales tax (6%) is calculated on the monthly payments when leasing a car in NJ. For example, 6% on a $400 monthly payment is $24, so your monthly payment including tax is $424.
Is that the same as what you were referring to Tarry?

No, they are TOTALLY wrong.

It is 6% of the Gross Cap Cost - Residual Value.

Some dealers should not be allowed to offer leasing. Most have no idea how it works and couldn't do it unless they have software to do it for them.

Oh well .... it keeps us in business.

-Tarry Shebesta
www.LeaseCompare.com Forum Moderator

So would this calculation be right?

Negotiated Selling Price = $35,350
Residual = $21,563.50

Tax on this lease = $827.19 (6%)
Tax over 39 Months on payments = $21.21

Is this correct?

Thanks!

Basically yes. The first number would be the Cap Cost, which includes the purchase price plus any other fees added to the lease.

The tax is paid upfront but you can put it in the lease and spread it out over the term.

-Tarry Shebesta
www.LeaseCompare.com Forum Moderator

Need to post an update to this thread.

In October 2005 NJ changed the way they collect sales tax on leases.

Sales tax in NJ is now based on the monthly payment, paid up front.

When you say the sales tax is on the monthly payments, to calculate this amount is it:

monthly depreciation amount x 6%

or is it:
(monthly depreciation amount + interest portion)
x 6%

Also if you have admin fees, bank fees and all those other nice fees they like to tack on rolled into your cap cost are all those amounts taxable?

And finally when you say it is due upfront, is it mandatory for that to paid at inception or could they roll it into the monthly payments. Thanks in advance I hope i was clear enough

Take the base monthly payment and multiply it by the tax rate. Then multiply this by the term and that is the total tax due up front. This amount can usually be added back into the cap cost.

Any fees added to the cap cost would be taxable.

Hey Tarry,

Also, they just instituted a 4% excise tax on vehicles with a cap cost in excess of $44,000.

Hope business is going well!

Michael Kranitz
leasewizard.com

Your lease payment includes a depreciation charge and a finance fee. Since you pay tax upfront on your total payments your are paying tax on interest as well as tax on the depreciation. If you roll the tax into your payment then that means you will be financing this charge. Ultimately you are paying interest on tax on interest? Is this correct? Sounds kind of shady to me.

You would be paying interest on the tax amount that you roll into the cap cost.