Lease then Buyout - Contract Explanation

[jd284]

The money factor is super high so Kia is making back the lease cash. You’re basically paying a premium on the car. Initially the adj cap cost is roughly the same as residual plus remaining lease payments (less money factor / rental charge). However, the longer you stay in the lease the more rental charge you are paying.
Short version- you’re paying significantly more if you stay in the lease full length and then buy it out. If you add up the residual plus all of your previous payments at the end you will see

 

[jd284]

@TackTuesday You will be hard pressed to find a discount beyond 3k-3.5k on a 2020. Loyalty can stack with lease cash but competitive cannot. Good luck!

 

[JaredHasselhoff]

The money factor is super high so Kia is making back the lease cash. You’re basically paying a premium on the car. Initially the adj cap cost is roughly the same as residual plus remaining lease payments (less money factor / rental charge). However, the longer you stay in the lease the more rental charge you are paying.
Short version- you’re paying significantly more if you stay in the lease full length and then buy it out. If you add up the residual plus all of your previous payments at the end you will see

Okay that makes a lottt more sense lol thanks. So the rental charge is basically eating away at the discount for leasing basically so your saving less? Do you know where I can see the rental charges and extra expense with my lease so I can see how much I’m losing. I put money down on it to, I don’t know if that effects anything it’s only a 2 year lease.

 

[SimpsonTide985]

I'm working on final negotiations for a deal.

2019 GT2 AWD
MSRP $53,910
Dealer "Rebates": $4,420
Dealer Price: $49,490
Lease Incentives: $12,100
Adjusted:$37,390
MF:.00186
Residual: 51%

31% off MSRP still sounds pretty good to me! I was hoping to get more on the Dealer Price, so I walked away for 5 days. I eventually came back, the car was still there, and they took another grand off.

I'm hoping I can drive off in it on Wednesday but they were being pretty coy last week about sending me a copy of the lease sheet for me to review before I actually go to the dealership. What could they be hiding? It's almost the end of the month, they shouldn't play any games.

Also, the sales guy mentioned that "don't forget, the rebates are taxable". WTF does that mean?
Any other "gotchas" that I should be aware of in case they try something on me when I get there?

 

[jd284]

looks good - in the northeast ive been quoted at 12,320 lease cash. i think the 12,100 is an outdated #

 

[G-446636]

looks good - in the northeast ive been quoted at 12,320 lease cash. i think the 12,100 is an outdated #

Well I’ll definitely check on that before I sign anything. There could be small differences in the incentives based on location.

 

[jd284]

Here's my latest deal:

2019 GT1 AWD white
MSRP: 49,180
Dealer Discount: 3,566
Selling Price: 45,614
Accessories: 229
Acquisition fee: 649
Net Trade: 2229
Adj Cap Cost: 35,602

unfortunately i missed out on a GT2 deal - with the higher dealer discount and lease cash the GT1 and GT2 are basically the same cost.

the difference is not that much from a 2020 GT1 which has 7900 lease cash and around 3k dealer discount

 

[SimpsonTide985]

looks good - in the northeast ive been quoted at 12,320 lease cash. i think the 12,100 is an outdated #

Yeah, I think it's different based on geography. In this particular area, 12,100 is the going incentive at the moment.

 

[SimpsonTide985]

I'm working on final negotiations for a deal.

2019 GT2 AWD
MSRP $53,910
Dealer "Rebates": $4,420
Dealer Price: $49,490
Lease Incentives: $12,100
Adjusted:$37,390
MF:.00186
Residual: 51%

31% off MSRP still sounds pretty good to me! I was hoping to get more on the Dealer Price, so I walked away for 5 days. I eventually came back, the car was still there, and they took another grand off.

So, I knew they were going to give me a discount since it was a demo vehicle. Now I just found out via email that the vehicle has 6,500 miles on it already, which, I'm not even sure they are legally able to lease? Or what, is 8,000 miles the limit?

Well, since I didn't know the exact mileage until now, I'm definitely gonna either try and get them to cut the price even lower tomorrow OR if they let me buy it on the spot, to just outright buy it at the adjusted cap cost and save me the trouble of the buyout.

Thoughts?

 

[2Slo4u]

So, I knew they were going to give me a discount since it was a demo vehicle. Now I just found out via email that the vehicle has 6,500 miles on it already, which, I'm not even sure they are legally able to lease? Or what, is 8,000 miles the limit?

Well, since I didn't know the exact mileage until now, I'm definitely gonna either try and get them to cut the price even lower tomorrow OR if they let me buy it on the spot, to just outright buy it at the adjusted cap cost and save me the trouble of the buyout.

Thoughts?

I think the mileage is over the allowed amount for a lease and they are not going to sell you the car for ACC with cash.

 

[SimpsonTide985]

I think the mileage is over the allowed amount for a lease and they are not going to sell you the car for ACC with cash.

So what do you think? Are they going to pull a bait and switch on me?

This would seem like a BIG red flag, no? What options do I have?

Is there a resource that indicates that 6500 miles would be too high for them to lease it to me? I've heard that they can still sell it to me leased as long as there hasn't been a title issued?

 

[stasek]

I'm working on final negotiations for a deal.

2019 GT2 AWD
MSRP $53,910
Dealer "Rebates": $4,420
Dealer Price: $49,490
Lease Incentives: $12,100
Adjusted:$37,390
MF:.00186
Residual: 51%

31% off MSRP still sounds pretty good to me! I was hoping to get more on the Dealer Price, so I walked away for 5 days. I eventually came back, the car was still there, and they took another grand off.

I'm hoping I can drive off in it on Wednesday but they were being pretty coy last week about sending me a copy of the lease sheet for me to review before I actually go to the dealership. What could they be hiding? It's almost the end of the month, they shouldn't play any games.

Also, the sales guy mentioned that "don't forget, the rebates are taxable". WTF does that mean?
Any other "gotchas" that I should be aware of in case they try something on me when I get there?

Regarding rebates being taxable - that’s a pretty standard practice by state governments. You WILL pay taxes on that $12,100, but not on a dealer discount, so when you do the buyout, you’ll be liable for taxes on $48,xxx (plus fees, if your state taxes them). As far as othe “gotchas” go, don’t let them talk you into buying blinker fluid or other crap they like to pile on (paint protectant, window vin etching, nitrogen in tires, etc). Those are pure profit for the dealer and don’t add anything to the actual value of the car.

 

[SimpsonTide985]

Ya know, I'm gonna pass. There's something fishy about this and I just looked up this dealership online and their reviews were absolutely HORRIBLE.

I think it's too good to be true. The super high "demo" mileage seems too suspect to me and put me over the edge.

 

[stociblazer]

I'm looking at under $31,000 buyout quote from KMFUSA. new 2020 GT2 RWD. hope this helps someone else.

lease terms: 24 months, 10,000 miles/yr
MSRP: $52,095
dealer-installed add-ons: $996 (tried to negotiate this to $0, but they met me in the middle and added $500 to their discount which is included below)
dealer discount: -$4,600
dealer price: $48,491
doc fee: $699
acquisition fee: $650
tax on lease cash: $273
title, reg, etc: $102
gross cap cost: $50,215
lease cash: -$9,100
trade-in: -$10,500
first month payment: $235
adj cap cost: $30,850

buyout is slightly lower as first month payment included a bit of depreciation. still trying to workout how the highway use tax will be paid here in NC. to pay the buyout, I'll be putting about $5,000 from my own cash and taking out a 401(k) loan to cover the rest. should be paid off in under 2 years. i know the 401(k) loan is controversial and it's not for everyone, but I think it's fine in my situation.

 

[stasek]

I'm looking at under $31,000 buyout quote from KMFUSA. new 2020 GT2 RWD. hope this helps someone else.

lease terms: 24 months, 10,000 miles/yr
MSRP: $52,095
dealer-installed add-ons: $996 (tried to negotiate this to $0, but they met me in the middle and added $500 to their discount which is included below)
dealer discount: -$4,600
dealer price: $48,491
doc fee: $699
acquisition fee: $650
tax on lease cash: $273
title, reg, etc: $102
gross cap cost: $50,215
lease cash: -$9,100
trade-in: -$10,500
first month payment: $235
adj cap cost: $30,850

buyout is slightly lower as first month payment included a bit of depreciation. still trying to workout how the highway use tax will be paid here in NC. to pay the buyout, I'll be putting about $5,000 from my own cash and taking out a 401(k) loan to cover the rest. should be paid off in under 2 years. i know the 401(k) loan is controversial and it's not for everyone, but I think it's fine in my situation.

By now I probably sound like a broken record, BUT instead of applying the trade in value to the lease, have the dealer cut you a check for $10,500. Why? If you total the car between the time you lease and the time you buy out the lease, you’ll most certainly lose a large chunk of that $10,500, since the insurance will pay out KMF first and you might get the leftover (and we all know how the values drop like a rock once you drive off the lot). If you put down $0 and total the car, the GAP insurance (included in your lease) would cover the deficiency.

 

[turtle225]

By now I probably sound like a broken record, BUT instead of applying the trade in value to the lease, have the dealer cut you a check for $10,500. Why? If you total the car between the time you lease and the time you buy out the lease, you’ll most certainly lose a large chunk of that $10,500, since the insurance will pay out KMF first and you might get the leftover (and we all know how the values drop like a rock once you drive off the lot). If you put down $0 and total the car, the GAP insurance (included in your lease) would cover the deficiency.

you are absolutely right. i didn't think to ask for that. hoping to buyout in next week or two. less people on roads and short commute to work so fingers crossed nothing happens!

 

[jd284]

I think I am finally joining the club! Here's my deal:

2019 GT1 Snow White Pearl

MSRP: $49,180
Discount: $3,680 (7.48%)
Selling Price: $45,500 (invoice = $46,163), $663 under invoice
Gross Cap Cost: $47,028
Total Cap Reduction: $12,767.64 ($10,420 rebate, $1k down+ trade equity)
Net Cap: $34,260.36

 

[ProsperDad]

ProsperDad, I'm in your area. Which dealer did you go to and how was your experience?

I got it at Van Griffith Kia in Granbury. There were only 2 dealers in Texas in September of 2018 that had a GT2 AWD in Ceramic Silver with Red interior, so made the 90 mile trek.

 

[jd284]

I pulled the trigger and am part of the group now! Love the car

 

[ProsperDad]

@Larson Huffine's in McKinney also knows the Balloon vs. Lease game in Texas. They tried to dealer trade to get me the one I wanted, but Van Griffith and the other dealer weren't willing to give up the car

 

[Windy]

I read this entire thread and have one state related question:

Does Illinois (Cook County 60164) double tax or are taxes wrapped in the lease? I'm going for the lease buyout and want to make sure I'm not being double taxed.

Thanks!