Dealer comments on leasing to buy....

[Brian Lewis]

I received this from my dealer. Is he correct? FYI: It is on a MSRP of $52,300 (GT2 AWD)...

I did a rough estimate on what you would pay if you did it the same way he did and it would work out to be about the same as purchasing it. When you buy out the lease you pay the the balance of the payments and the residual as well as sales tax on the residual. I was able to get the payments to 665 for the 10000 mile per year lease. 665x36= 23940 the residual would be a percetage of the MSRP in this case it would be 52% for the 10000 mile per year lease $52300x52%= 27196 so your total cost would be the 23940+27196=51136 sales tax needs to be paid on the residual of 27196x6%= 1632. 51136+1632= 52768 this would be your cost before any tag fees or titleing fees. on a purchase it woud be $53210 before any tag or titling fees. There is a slight advantage to do it the way your mentioned. The 7200 reduces the payment but not the residual and if you finance with Kia, you pick up $750 rebate which puts the advantage back to purchasing.

 

[Rufus]

Hmmm....the $7200 lease cash reduces the MSRP to $45,100. Residual would stay the same. So, if you were to sign a lease, the net cap cost would be $45,100 NOT $52,300.

He isn't telling you about the finance charge baked into the lease (MF, or Money Factor) which has been about 4-ish %. Net cap cost of $45,100 minus residual of $27,196 =$17,904.

That is the actual amount ÷ by 36 pts. By buying out the lease after making that first payment, you avoid the finance charge accrued by the MF. You'd need the cash to do so or have financing in place.
EXAMPLE: my wife and I leased a base rwd model. We agreed on the MSRP of $32,800. Lease cash was $5k, so net cap cost was really $27,800. We made the first pmt then secured 2.9% financing @ 72 mos to buy out the lease. We saved about $3300 on MF charges, and since the lease cash was already applied, our 2.9% will be on that net amount, minus taxes, etc. All in, after 72 mos our total outlay will be about $2300 over MSRP. Doing it this way ONLY made sense with the lease cash. Otherwise, I'd finance straight up.

 

[Falaris]

I agree something is not correct in the dealers numbers. I bought my GT2 AWD on Jan 15th. Here is what my buyout says right now after initial and one additional payment in Feb.



Add back in the payments I made of $1521.10 and 48,169.18 is what I would end up paying for the car after the $7200 lease discount.
The buyout disclaimer says it includes all taxes and any other amounts included in the lease agreement. I asked the finance guy about buying out the lease and saving money when I signed he said the same thing, since you have committed to all the payments and interest up front it would not save you any money. Maybe I am missing something but it sure seems like a better way to go to me.

I have no plan to buy it out this time as I am waiting for any fixes, improvements and other features to hit in the '21 model year. I do plan to lease then buyout then though if the lease rebate is worth it.

Hopefully this helps!

-Fal

 

[Submarines]

Agreed with the other two posters, you don't roll the finance charges if you are doing an immediate buyout, only if you're leasing the full term then buying out.

Residual is based on MSRP though.

You also haven't considered the interest rate with a regular financing and taxes as well.

Assuming you do a 72 month finance at 2.9% with taxes at 6%, your total cost of the loan $60,468.

Though you should really aim for invoice and not MSRP...

 

[TXGT2]

Hmmm....the $7200 lease cash reduces the MSRP to $45,100. Residual would stay the same. So, if you were to sign a lease, the net cap cost would be $45,100 NOT $52,300.

He isn't telling you about the finance charge baked into the lease (MF, or Money Factor) which has been about 4-ish %. Net cap cost of $45,100 minus residual of $27,196 =$17,904.

That is the actual amount ÷ by 36 pts. By buying out the lease after making that first payment, you avoid the finance charge accrued by the MF. You'd need the cash to do so or have financing in place.
EXAMPLE: my wife and I leased a base rwd model. We agreed on the MSRP of $32,800. Lease cash was $5k, so net cap cost was really $27,800. We made the first pmt then secured 2.9% financing @ 72 mos to buy out the lease. We saved about $3300 on MF charges, and since the lease cash was already applied, our 2.9% will be on that net amount, minus taxes, etc. All in, after 72 mos our total outlay will be about $2300 over MSRP. Doing it this way ONLY made sense with the lease cash. Otherwise, I'd finance straight up.

Excellent point, Rufus. I agree the MF factor wasn’t emphasized.

 

[Mach_Tuck]

Hate to say it...your dealer has no idea what they are talking about. The buyout amount is clearly explained no the back of the lease and details exactly how the amount is calculated.

You DO NOT pay the finance/rent charges calculated with the MF when doing a buyout. I posted all of this under a separate thread in this same forum. I cant seem to paste the link from my phone right now but it is stickied.

From a high level, you would pay the ADJUSTED CAP COST plus whatever RENT has been earned based on the buyout date. If you live in an area that has sales tax, you would also need to pay that. Title and License are more than likely ok since you would have paid them for the lease.

 

[Fl stingergt]

Who cares buy drive it love it

 

[Big]

Hate to say it...your dealer has no idea what they are talking about. The buyout amount is clearly explained no the back of the lease and details exactly how the amount is calculated.

You DO NOT pay the finance/rent charges calculated with the MF when doing a buyout. I posted all of this under a separate thread in this same forum. I cant seem to paste the link from my phone right now but it is stickied.

From a high level, you would pay the ADJUSTED CAP COST plus whatever RENT has been earned based on the buyout date. If you live in an area that has sales tax, you would also need to pay that. Title and License are more than likely ok since you would have paid them for the lease.

Here is the link:
Lease then Buyout - Contract Explanation

 

[Big]

I contacted KMF yesterday and they confirmed the buyout process as explained by Mach_Tuck. However, because I do not have an account (yet) they could not send me the details in writing. But I am leaning towards making the plunge.

 

[Mach_Tuck]

I got my buyout quote online.

Adjusted cap cost plus tax...done

Only thing holding this up is state title/reg. credit union needs the original and I fear I won't have it prior to needing to make one additional lease payment. All well, one more month under their gap protection is how I see it.

Just to note, the buyout quote was good till the next payment due date so it doesn't appear they will give a prorated amount. I have not called to press the issue either however as the buyout amount was spot on.

Cheers

 

[Mach_Tuck]

Update: Spoke to KMF today about the buyout amount. They will not prorate the date so the buyout is always good until the next scheduled due date. kind of sucks since the are carving the rent for the entire month even if you pay it early.

May as well time the buyout to coincide as close to possible with good til date is my opinion.

 

[NYLAWBIZ]

This is my buyout. MSRP $52,900

Got about 1/2 of my first month's rent back in reduction to ACV.