Lease then Buyout - Contract Explanation

[h1pst3r88]

So, I used all the great information here to lease a 2018 Stinger GT2 RWD- THANK YOU!. The March lease cash on a two year was $9500 plus $400 military so $9900 in KIA rebates. The discount took a lot of talking with several dealers. Eventually, my discount was raised from the initial $6500 to $8000 and car was tint included. So $32,600 PLUS $349 doc fee PLUS the $650 Acquisition Fee (adds a solid $1,000 to the deal)= $33,599 net cost. Plus rental fees, buyout fee between now and when I pay.
Plan to pay off cash ASAP. Kia's giant lease cash is a no brainer and i wonder how many people buy out these cars.

Okie, how did you do this... are you saying that the payoff amount after 1-month of leasing to buy the car would be $33.5k?!

I just spoke with a dealer in my area that has a '18 GT2 brand new and loaded and with the same terms that you describe (9500 lease cash incentive + $400 military discount) the buy-out price after 1-month (with no money down) would be $41k... and I had to work to get that! I literally read him your post while on the phone and he had no idea how to get the price that low despite expressing that he desperately wants to sell the car because he has already sold several 2019s and this showroom floor 2018 GT-2 is languishing.

Any help is greatly appreciated because at $33.5k on a 24month lease with a buy-out after the 1st month is a no-brainer... I would buy it!

 

[h1pst3r88]

Okie, what dealer did you work with. If I could get that deal I would pretty much travel there and drive home. I am in Boston.

 

[JVsGT]

Of course it is well in 2019 and I guess they need to move them sometime. Makes me think car dealers actually make a lot of money on most car sales regardless of this "invoice" fiction we hear about. I did not include the 4.5% OK taxes since that means nothing to anyone out of state.

I'm assuming OK doesn't "double tax" on lease buyouts like the great state of TX does. In other words, we are charged taxes on the full purchase price at lease inception and then taxed again on the buyout amount since it is considered a separate/new transaction. Our tax rate is 6.25% so no way lease buyouts are favorable in Texas.

 

[h1pst3r88]

Guys, this is the best I can seem to get from a dealer in NH. This is for a 2019 GT2 on 2-year lease but even when I was talking to a CT dealer with a 2018 the numbers looked similar except the monthly lease payment was like $665. At $39.8k I won't buy it; at $33.5K I would!

Okie, I don't know how you did it, but you stole that thing!

 

[JVsGT]

Guys, this is the best I can seem to get from a dealer in NH. This is for a 2019 GT2 on 2-year lease but even when I was talking to a CT dealer with a 2018 the numbers looked similar except the monthly lease payment was like $665. At $39.8k I won't buy it; at $33.5K I would!

Okie, I don't know how you did it, but you stole that thing!

View attachment 21225

Is this an AWD or RWD model? That "Market Value Selling Price" seems high to me. Have you seen the actual MSRP on the window sticker? The MSRP should be the baseline they start with.

 

[h1pst3r88]

Agreed, JV. It's $54,805... seems way too high

 

[MerlintheMad]

Agreed, JV. It's $54,805... seems way too high

That's just to make their dealer discount look more impressive.

Is this out the door? That final price isn't bad, especially if it's an AWD.

 

[Rob M]

I'm assuming OK doesn't "double tax" on lease buyouts like the great state of TX does. In other words, we are charged taxes on the full purchase price at lease inception and then taxed again on the buyout amount since it is considered a separate/new transaction. Our tax rate is 6.25% so no way lease buyouts are favorable in Texas.

I've seen at least a couple posts in this forum and others that suggest that TX "double taxes" lease buyouts. I was actually convinced that was indeed fact and may of even posted a similar comment. However, TX Administrative Code, Title 34, Part 1, Chapter3, Subchapter F, Rule 3.70 Motor Vehicle Leases and Sales, subsection (C) states the following:

"If the transaction is considered to be a sale and not a lease, as described in subsection (b) of this section, no additional motor vehicle sales tax is due at the time the initial lessee/purchaser takes title to the vehicle, provided the correct amount of tax was previously paid on the total consideration. If the correct amount of tax was not paid on the total consideration, the lessee/purchaser must pay the difference when the vehicle is titled in his name."

I live and MD and the TX law appears to be similar where if the initial lessee buys the vehicle, additional taxes are waived even though there is technically a change in ownership from the lessor to the buyer.

 

[robz32]

Very informative @Rob M

 

[JVsGT]

I've seen at least a couple posts in this forum and others that suggest that TX "double taxes" lease buyouts. I was actually convinced that was indeed fact and may of even posted a similar comment. However, TX Administrative Code, Title 34, Part 1, Chapter3, Subchapter F, Rule 3.70 Motor Vehicle Leases and Sales, subsection (C) states the following:

"If the transaction is considered to be a sale and not a lease, as described in subsection (b) of this section, no additional motor vehicle sales tax is due at the time the initial lessee/purchaser takes title to the vehicle, provided the correct amount of tax was previously paid on the total consideration. If the correct amount of tax was not paid on the total consideration, the lessee/purchaser must pay the difference when the vehicle is titled in his name."

I live and MD and the TX law appears to be similar where if the initial lessee buys the vehicle, additional taxes are waived even though there is technically a change in ownership from the lessor to the buyer.

Rob,
I'm not going to get into a long dialogue on this topic because I've personally covered it extensively. All I'll tell you is, I am aware of the Tax Code here in Texas including the portion you referenced above because I attempted to buyout my lease on my first Stinger. A lease is a lease and a purchase is a purchase. Texas considers the two separate and taxable transactions. I've gone over this with the local Tax Assessors office as well as Credit Unions and Financial Institutions. All state the same thing, "you will be taxed again on a lease buyout".

 

[Stevizzle]

Hello,

I just leased a 2019 GT2 RWD and my adjusted cap cost is like $42.5K it looks like I could have done better, but Its too late now! Im in Florida and I asked the finance manager about the lease buyout and he confirmed I would have to do it at the dealership and they can only charge me their dealer fee, which is like 1K (Above average). I just have a few questions if anyone can answer.

1. Im wondering what others are getting for loan rates at 72 months? I checked with my local credit union today and the lowest is 4.10%, which seems high to me.
2. Does anything know how the sales tax works in Florida? Is it based on the MSRP, agreed upon sales price, or just the total buyout amount? In, addition is the lease rebate taxable?
3. Would I still have to pay the lease buyout fee in addition to the dealer fee of $700-1000? Just doesn't seem fair that I have pay atleast $700 more just because of state law .

Based on my calculations It doesn't really make sense for me since I would have to put alot down to get lower than my current lease payment, I forgot about the sales tax and anticipated a lower interest rate .

 

[Rob M]

Rob,
I'm not going to get into a long dialogue on this topic because I've personally covered it extensively. All I'll tell you is, I am aware of the Tax Code here in Texas including the portion you referenced above because I attempted to buyout my lease on my first Stinger. A lease is a lease and a purchase is a purchase. Texas considers the two separate and taxable transactions. I've gone over this with the local Tax Assessors office as well as Credit Unions and Financial Institutions. All state the same thing, "you will be taxed again on a lease buyout".

Thank you. I stand corrected. The Texas Motor Vehicle Handbook describes the taxation law much better than the Administrative code does. So in TX you would have to get the lessor to agree to a conditional sale (lease/purchase) transaction with no additional tax implications. I have no idea whether KMF structures that type of transaction with the lease rebate - but I'm sure others in this forum know.

 

[ksti]

Agreed, JV. It's $54,805... seems way too high

the window sticker icon linked on their webpage shows window sticker MSRP is $53310

www quirkkianh com /inventory/2019-kia-stinger-gt2-awd-4dr-car-knae55lc5k6046298

 

[h1pst3r88]

Just a quick update on my potential deal. By earnestly engaging different dealers in an effort to find the best lease-to-buy deal I've been able to get a deal close to Okie's on a new 2018 GT2 with an original sticker of $52k.

The current best deal we've worked as of this evening requires $5k down from me and brings the monthly lease payment to $370/mo (including tax) for 24 months and 12k miles per year. If I were to buy the lease out after one month (which is the plan) the buyout would be $33,552 out the door for a GT2 with original MSRP of $52k ($33,552 + my down payment in cash for the total cost of ownership).

This is based on a $5900 discount off MSRP and then $9900 in lease incentives (including military veteran). I am holding out for $7900 off of MSRP and am willing to move up to $5500 cash down.

Any thoughts or strategies? I'm very close to doing this deal. It's red with black and fully loaded including Nappa, even though my choice would be ceramic with red. The red is badass though.

 

[MerlintheMad]

Just a quick update on my potential deal. By earnestly engaging different dealers in an effort to find the best lease-to-buy deal I've been able to get a deal close to Okie's on a new 2018 GT2 with an original sticker of $52k.

The current best deal we've worked as of this evening requires $5k down from me and brings the monthly lease payment to $370/mo (including tax) for 24 months and 12k miles per year. If I were to buy the lease out after one month (which is the plan) the buyout would be $33,552 out the door for a GT2 with original MSRP of $52k ($33,552 + my down payment in cash for the total cost of ownership).

This is based on a $5900 discount off MSRP and then $9900 in lease incentives (including military veteran). I am holding out for $7900 off of MSRP and am willing to move up to $5500 cash down.

Any thoughts or strategies? I'm very close to doing this deal. It's red with black and fully loaded including Nappa, even though my choice would be ceramic with red. The red is badass though.

The price isn't $33,552 if you are putting cash down; you have to add the cash down to the so-called out the door price. So the dealer is really selling the car for $39,052. That's still not bad for an MSRP of $52K.

Those who know say that you don't put cash down on a lease, especially one that you plan on buying out.

 

[h1pst3r88]

Merlin, I noted that the out the door price would be 33,552 + the cash down that I put.

I am hoping that Okie chimes in again to answer some of my questions about his deal, specifically, did he put any money down, what are his monthly lease payments, and how did he get them to drop 8k from MSRP.

I do wonder what the logic is on money down vs. no money down. It seems to me that if you are planning on buying it out that it wouldn't matter one way or the other, because that downpayment is coming off the top of the MSRP and has the added benefit of lowering the monthly payments for as long as you choose to lease over buy out. But I would love to know what the experts say.

 

[MerlintheMad]

The experts who have added to this prolonged conversation seem to advocate for keeping your cash in a savings account for future use. You should be leasing at a monthly rate that you can afford, after getting OTD on the price you insist upon. Dealers will try and bargain with monthly payment and avoid OTD altogether. They can finagle to maximize profit while making us happy with the monthly payment. But bargaining directly with OTD empowers the buyer to control final costs of purchase. A really good OTD lease will result in a lower buyout. And the money you'd have put down to lower the monthly lease payment will still be yours. You'll probably use it to do the buyout anyway, but not necessarily directly. Your loan to finance the buyout can then be reduced directly with the credit union, which (I am told) is more efficient in reducing interest, than putting money down on the lease. (I've already probed the limits of my understanding on this esoteric matter!)

 

[OKIEBoy]

Okie, what dealer did you work with. If I could get that deal I would pretty much travel there and drive home. I am in Boston.

Ferguson KIA Broken Arrow OK-I bought the last GT2.

 

[OKIEBoy]

Merlin, I noted that the out the door price would be 33,552 + the cash down that I put.

I am hoping that Okie chimes in again to answer some of my questions about his deal, specifically, did he put any money down, what are his monthly lease payments, and how did he get them to drop 8k from MSRP.

I do wonder what the logic is on money down vs. no money down. It seems to me that if you are planning on buying it out that it wouldn't matter one way or the other, because that downpayment is coming off the top of the MSRP and has the added benefit of lowering the monthly payments for as long as you choose to lease over buy out. But I would love to know what the experts say.

Hey, I paid the TTL and first payment up front. So dealer DOC fee $349 and AQ FEE $650 all rolled in. The payment on a 2/24 came out to $422.25 . I did get talked into wheel protection, PDR and glass protection for $7 per month which seemed OK.
The deal seems good and I will take it this one time in my life!

 

[h1pst3r88]

OkieBoy, thanks so much for the detailed info! What was the original sticker price so I know the discounts they extended you. You got such a great deal! If I could find that... even on a GT1 I would do it!

Enjoy the Stinger!!!