Thread: Gas guzzler tax
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      02-07-2013, 08:58 PM   #7

Drives: Double Vanos'd Civic-M3
Join Date: Oct 2009
Location: San Francisco

iTrader: (6)

I think you're right it doesn't roll into MSRP part but only b/c MSRP is use to figure out the residual. But apparently some lessors do roll it into residuals. One way or another, the gas guzzler cost is calculated into cap cost.
So higher cap cost figures into higher depreciation, and higher interest, hence higher monthly payment. You can't beat the system.

Lease Payment Calculation Formula:
(Cap Cost – Residual Value) / Term = Depreciation
(Cap Cost + Residual Value) X Base Rate = Interest
Depreciation + Interest = Base Monthly Payment

Terms Used in Lease Formula:
CAP COST = Vehicle Purchase Price (amount financed)
RESIDUAL VALUE = MSRP (window sticker) X Residual %
TERM = Length of Lease in Months (3 years = 36 months)
BASE RATE = Dealer’s Buy Rate (dealer can mark this up for profit)

Another beauty of buying pre-owned. You don't pay all the gas guzzler "costs" up front, if at all.

Last edited by mdosu; 02-07-2013 at 09:13 PM.