Ask him to give you exactly the numbers he's using. Let's now look at the formula. If you don't particularly like math, our Lease Kit provides easy to use payment tables that can be printed and used in place of the formula. The printed tables can be carried with you to the dealer's showroom so that you don't need to do calculations there. We'll look at each of the parts of the formula below.
Sales tax is covered a little later.
You pay off an equal portion of the total expected depreciation each month. A good lease deal is when you have the lowest possible Net Cap Cost with the highest possible Residual. It's not double-counting as it may appear. It's simply a way of calculating the average amount financed without using complicated constant-yield annuity formulas. It's perfectly legit.