Quote:
Originally Posted by kobechrome
Sales tax is rolled into the payment in this case so isn't this irrelevant? Tax is already on the total amount.
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It is relevent. Rolling tax into payment is not same as charging tax on monthly payment.
States such as CA/FL charge tax on monthly payment and
tax is collected every month.
States such as NY/NJ/OH etc charge sales tax on SUM of monthly payment and tax is
due upfront. If you are leasing in one of these states you have 2 options:
a) pay sales tax due upfront or
b) capitalize it (add it to cap cost).
If you capitalize sales tax then you have to pay interest on this money borrowed from BMWFS. So calculate payment in 2 runs, first calculate the pre-tax payment. Figure out sales tax, add it to cap cost and re-calculate the payment. However, in case of NY there is an additional step before adding sales tax to cap cost: you have to apply tax on sales tax being capped -- the only state that does this.