what is capitalized cost reduction This is a topic that many people are looking for. newyorkcityvoices.org is a channel providing useful information about learning, life, digital marketing and online courses …. it will help you have an overview and solid multi-faceted knowledge . Today, newyorkcityvoices.org would like to introduce to you CAR LEASING contracts. How to read them so you don t get SCAMMED into paying too much.. Following along are instructions in the video below:
“Right here 30 inches long and this is your typical gm financial lease contract do do you think you can read all of this and not be confused i ll you everything you need to know about a lease contract in this video lease contracts are much bigger but they have less information on them that you can typically read than a retail contract there s no interest rate on a lease contract. I m going to show you exactly what to look for and how to make sure that you are getting the right information the right price on the car and to make sure that you don t get duped by a bad car dealership so we re going to get right into this because i don t want this to be a super long video. But before i begin notice. What kramer s tonyia go to they buy some ship dude swag at chevy nudie store calm also you can support the channel by not purchasing anything for me at all by using the amazon link this down in the description below.
So bookmark that use the amazon link every time you shop on amazon. And it supports. This channel directly giddyup. So here is the lease contract that i showed you the beginning.
Two videos. So the stuff blacked out is just dealer information. Nothing. There this should be your name here.
The dealer s name there and their address and down here. Because again just like i said in the last video. Every single one of these numbers is made up i m just using these numbers for demonstration purposes. We have a twenty thousand dollar purchase price car.
We have a trade in on here that is worth five thousand dollars you owe six thousand dollars. So you have one thousand dollars negative equity and then we re gonna do a 36 month lease on here so coming down. Here. This is something extremely important to look at as well the amount due at lease signing so this is cash that you re putting down so in this instance.
We re putting two thousand dollars down on this lease this is your first monthly lease payment of 405 oh five it is due today because your first lease payment is always due on the day that you do your lease. Because you always pay a month in advance. So that way when you make your thirty six payment you still have 30 days with the car and you re not just giving it back so those payments are going to be followed by 35 additional payments of 400 505. Doing the twentieth of each month.
So there s no single payment so like if a payment was 405 and 10 cents to equal out at the end. I see some of them do that so i m not i don t understand it i ve never seen that on any of my contracts. I ve done over the last 19 years. And then numbers see down here is 400 500 five times 36 months.
And that s how it cost right there total to lease the car so other charges i put this in here because this is a disposition fee a lot of lenders and a lot of leasing companies have this the reason. I wanted to use this is so it s understandable of what it is the disposition fee is a fee that you get paid if you do not purchase the car at the end of the lease. So this most likely you re never going to purchase the car at the end of the lease now in some cases. There are incentives to release through the same bank same lender and they sometimes will waive that so you can ask that at the end of the lease.
But just so you know there may be a fee at the end of the lease. This number right here is all of your payments. Added up and it tells you right there..
That it is what is calculating that number right there now coming down. Here this portion is extremely important. Too because this is the automation of a mountain do at least sign and this tells you exactly what your 2000. Is going towards so 1100 66 93 cents is going to reduce the payment on your car anytime that you put money down you are reducing the payment you are doing nothing more than that i do not recommend that you put much down on a lease.
Simply because in the event that you have a total loss this money that you put down is completely gone. It is just like you. Burn it you did nothing for it. So if you put 10000.
On the lease to lower your. Payment and you have a total. Loss you ve lost 10000. Bad idea to do so.
That s what is used out of this so the rest of it is seventy dollars for tax because you re always taxed on the money you put down because you lower your lease payment and you re only taxed on a lease based off your lease payments so if you put money down you ve got to be taxed on it so that s your payment your first payment is out of that. 2000 so don t let dealers tell you that it s 2000. Plus first payment back in the office. It s part of the lease.
It s part of it and they ll show you that there. So this is just the title fee that s the dealer doc fee and all of that equals 2000. Over here i didn t include anything in this no no trade allowance in there okay we have a negative one thousand dollar balance on our trade. I m going to show you where that comes into play here in a little bit no rebates or cash credits or non cash christ.
I mean. And then this is the amount that you put down so that still totals 2000. Now this part right here this is extremely important to read over carefully as well. The reason we want to read over this is because the numbers are a little bit tricky and you ve got to know where to look at in order to come up with all these numbers this right.
Here. This is your gross capitalized cost. This is the amount that you re paying for the. Car.
So if you see that the car is listed. For 15000 and the msrp is. 20000 and the dealership is charging you 20000. You know that you re paying msrp for the vehicle which we don t typically do unless.
It s the specialty car so you re not gonna be able to get that out of salesman. You ve got to just be larry and be on your game. When you go into the finance office..
So over here that number is twenty one thousand six hundred and fifty dollars because this is also includes service contracts insurance and outstanding prior balances on your vehicle. So you have one thousand dollars in negative equity and then we also i m going to show you down the road. We have six hundred and fifty dollars in registration and title and taxes that is going to be paid in that as. Well so that s why that s 21000.
650. Even though you re paying twenty thousand for the car down below. Is your capitalized cost reduction. The 1166 93.
Remember that up here. So that s where that came in and that equals net minuses in equals. Twenty thousand four eighty three the residual value. This is what you re going to pay for the car at the end of the lease.
So this is what the least in value is so what six thousand nine hundred and sixty four dollars in depreciation amana s amortized amounts is thirteen five this is just a rent charge okay so dealerships can mark up the base money factor. You don t really have an interest rate. You have a money factor on a lease it s completely ethical and it s a way that dealerships can make a little bit of extra money and don t negotiate the money factor. Let them make this money.
This is a huge help to both parties. So you can see over the contract. This is thirty six payments over the contract. This is what their interest is cost costing you to use this car.
So. This is two hundred and thirty seven dollars or thirty six months you re talking six bucks a month so over here it s all added up this tells you what your payments are at thirty six months and this is loss just a little bit. But this is your 36 month pain this is your base payment. This is what your payment is and this is what your sales tax is so your sales tax is based off of your base payment you re not going to get that out on the sales floor.
So again it s good to know what you re signing when you go into that finance office with that dealership. So and then this number. And this number equals your four oh five payment. So let s go.
Down. Here. So if you have excess wear and tear over 12000. Miles it s 25 cents per mile so you need to know that upfront what it is per mile so don t look at this as a fee or a penalty.
You re just driving the car. More than you anticipated in every mile that you drive on the car its depreciation and that s the beautiful thing about the lease is if you decide that you want to drive more you know this 25 cents per mile and if you know that you re doing that so add that into your payment every month. And just throw that to your payment and that way you don t have a big lease charge at the end of your lease..
So this is your purchase option in price. I already mentioned that up there so on this twenty thousand dollar car. You can buy it for just at seven thousand dollars plus. Any taxes and stuff like that there s no fee to purchase the car and when you do this your disposition fee that i had up there is waived as well remember i said that so down here is your trade in again.
All made up numbers that all made up stuff. I m not going to put a trade in there so that s where your trade would be in this shows that your trade is worth five thousand dollars your payoff is six thousand dollars. And it is zeroed out if this is a positive number say this number was reversed your trade was worth six thousand dollars and your car s payoff was five thousand dollars you would have 1000. On there you cannot have a negative number on a lease which is why this comes up here at twenty one thousand six hundred fifty dollars.
When you pay twenty thousand dollars for us so if you re always going to show if you have negative equity. You re always going to show a zero in this column right here over here is an ionization of grossed capitalized cost the agreed upon price for your vehicle you have six hundred video hours and license taxes registration fees and your thousand dollar negative equity so again this is off just a little bit so we re going to look at this as prior credit to lease balances. A thousand bucks you can see that s off there a little bit so don t think that s a thousand dollar doc fee so and then over here it s all itemized out yeah 21 650. So down here these are just an estimate of the official tea fees and taxes that you may pay over at least.
It s kind of just a full disclosure and then if this is your late payments. 25 or 5. Whichever is usually greater and then this part right here tells you that if you have a toll or a penalty or a parking ticket because if they ticket. The manufacturers bank or the bank that s leasing it that you re going to pay that fee plus a 25.
So that tells you everything there so down. Here is the one you want to watch as well this tells you any type of optional products and services and it says optional these are not mandatory. These are not necessary and they cannot be say hey you have to do this inside the vehicle in order to get this lease. They would be listed here and i m going to show you what that looks like over there at that point you re pretty much done you re going to sign here.
You re going to sign here. And you re going to sign right here. We re going to move over to the lease contract with the added accessories ie service contract. There are service contracts and other available options on a lease that sometimes i ll recommend to my lease.
Customers. And i m gonna go over this part real quick you ll see there s the same. 2000 for 496. 68 is what this payment is because we have 3000.
And added stuff in here so that s going to change still 35 payments total amount they re told them out there same disposition fee you have the taxes the capitalized cost reduction is reduced a little bit from 1166 b. Just because of the way the lease works out you have 496 payment. Because this is going to change with the payment going up this nut mounts going to be down fees dock fee and a total of. 2000 that 2000 comes over here so again 20 grand here and now this is 24 649.
Because i have added three thousand dollars in added benefits on the vehicle and we re going to come down here we re gonna skip all this stuff because it s all right here and this is where that s optional equipment may show up in one area you can see that we have service contracts at 2300. And we have the e. What i have is select..
This is kind of like a tire will dent dang lost key function. I sell a lot of times to my. Customers this really good thing at 699. Just depends on the customer in the situation.
So that is itemized out right. There you want to make sure you watch this right here. You want to make sure you watch this up here as i just mentioned those are the two areas that you want to watch again we still have 12000. Miles a year 25 cents overs on mileage 69 64.
You can see that adding in these service contracts does not affect the residual so down here. We re going to come way down. Here and you re gonna see that now this last. One had nothing here it said not applicable right not after all in there.
Now. It s gotta be full disclosure right. It s got to be itemized out so this is the service contract at 2300. This is the i don t have gap in there.
I didn t mean to say gap. But i wrote it in there by accident. But etho select so six hundred ninety nine dollars and now what happens is we add two more initials here okay. So you have to initial there and initial there so that way the bank knows that the dealership is not swooping things in for you and making you do something that you don t want to do you re going to sign there sign there and sign one more time all the way down there as well now.
I made a little mistake in there and forgot to take the word gap out of the contract when i printed this up. Now you typically don t need gap insurance on a lease because the lease or which is the bank includes that in in most cases on the lease to protect themselves and to protect you you ll want to ask your salesperson up front. If gap insurance is included on your lease because you re always going to have negative equity on a lease with that being said thank you so much for watching make sure you check out chevy dude store com. Support the channel by shopping at the store or using the amazon link make sure you hit the subscribe button.
Because at the time of this video. I m sitting at one hundred and thirty nine thousand one hundred and twenty subscribers now i tell people all the time they come into the dealership. They want to meet me they want to take a picture of me they one of my autograph which is crazy because i m a car salesman. I am not supposed to be like a very routine comment on this channel is your car sales been teaching people about bad car sales techniques.
That s got to be a conflict of interest and how you not fire all the time and whatnot. It s a fun channel. I loved and i m so fortunate to work for a company that doesn t hinder me for doing videos like this that tells you how great of a company. I work for so again as always make sure you hit the subscribe button train about notifications on leave a thumbs up shop.
The chevy dude store use the amazon link and i ll see you the next video thanks again for watching have a great day and drive safely. ” ..
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