Sorry, in the previous posting the forum site did not allow me to post an Excel file, thus I transferred to to a doc file. If you wish to receive the Excel file, send me an e-mail and I send it back to you. Thanks.

I am planning to lease the RX-8. Two leasing companies have given me two different methods to compute the residual payment. Which is right, scenario one or scenario two (I have attached a Word file with the copy of the Excel spreadsheet with the side to side calculations.)

The basic assumptions are the same, deposit is $ 4680. My monthly lease payments must be exactly $920 with taxes.

Scenario one on the left, has no GST calculations on the downpayment. The scenario on the right, number two, shows that the leasing company has to pay to Mazda, not only the purchase price, but also the GST, thus the amount I borrow from the leasing company is higher. Also the downpayment includes taxes, and therefore the downpayment is less, since some of it is taxes.

Scenario 1 has a much lower buyback payment than scenario 2, but which of the two is right ? Or are they both wrong ?

I would like to know before I sign on the dotted line.

Thanks for the help. The Word file is attached.

They're both right... It just depends if you want to absorb the GST up front or later and have a higher buyback. This is what they call a baloon finance, or a Royal buyback I believe. If you can swing it you're better to pay the GST up front, then you have more money going towards the principal.

I think that's right, but I'm no expert. Just talk to the leasing co. for the lowdown before you jump into it.

Actually come to think of it, it all seems like some jive talk to me. Just get the details from each company. You employ them it's their job to explain it, they shouldn't have any qualms about doing so.

Mr. Eccentric. Thanks for the insight.

Indeed since I have a GST number I can pay the GST upfront and use it as a credit against GST collected. In this way I do not have to borrow the funds to pay the GST.

The solution was in front of me and I did not see it.