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Lease then Buyout - Complete Experience/Explanation

Discussion in 'How to Buy a Kia Stinger' started by Mach_Tuck, Apr 9, 2018.

  1. Mach_Tuck

    Mach_Tuck United States Active Member

    Hi All,

    Just finished, well finishing my buyout today with KMF.

    Here is a summary of the process from dealer to done.

    I leased my GT2 RWD Limited on 3/6 using the lease cash benefit of $6700.

    The lease cash was used to "front" the first month payment (723), tax on lease cash (348), title and registration (840) and criminal dealer doc fee (489). This brings the capital cost reduction to 4300 )(lease cash - upfront fees). I chose this so that i didnt have to put any money upfront for the car...would rather keep funds liquid and invested.

    MSRP - 50175
    Purchase Price - 48074 (47574 invoice + 500 tint)
    Lease Fee + Serv Contract - 1086 (650 + 436)
    Gross Cap Cost - 49160 (48074 + 1086)
    Cap Cost Reduction 4300 (see above for breakdown)
    Adjusted Cap Cost - 44860 (49160 - 4300)
    Residual - 26091 (really doesnt matter since i was purchasing)
    Depreciation/Amortization - 18769 ( 44860 - 26091)
    Rent - 5338 (Adj Cap Cost + Residual * Money Factor)
    Base Monthly Payment - 669 (Dep/Amortization + Rent)/Lease Term
    Monthly Sales Tax - 57 (AZ taxes leases only on use and NOT full amount) (Base * Tax Rate)
    Total Monly Payment - 726 (this is slightly higher than normal since i elected to use the lease cash for the upfront fees not associated with the actual purchase price of the car.)

    My account became active on KMF approx 10 business days later. Navigate to the "buyout quote" screen and see the following:
    BUYOUT AMOUNT - 48,460 (Adjusted Cap Cost * Tax Rate)(NOTE: this tax rate is slightly lower than above as AZ use tax is based on garaged address and actual purchase sales tax is based on dealer address) In AZ, for the buyout, you pay the sales tax on the buyout amount. This may NOT be the case in all states. Its up to you to understand tax liability in your situation.

    Since i had not made any other payments, the Adj Cap Cost was equal to the Adj Lease Balance per Section 22D of the lease agreement. Also worth noting is that there was no "purchase option fee" listed in Section 9 so the buyout amount was straight forward.

    Went through local Credit Union to secure financing (60 month at 2.49%) and sent the check in to the Kia Overnight Buyout address. I had to wait until the official registration showed up so the buyout check arrived 1 day prior to my next lease payment on 4/6. I also had to fax, yes fax, the odometer disclosure statement in as they dont/wont accept a scanned email...really? Kia does not offer any proration of the buyout amount based on when the check gets there. This sucks as you then have to pay the entire month of "rent" even if pay it off one day after the lease payment is due. My suggestion would be to time the arrival as close to lease payment due date as possible since Kia is covering the GAP until that point.

    I wish it ended here...come to find out, Kia decided to NOT apply the 48460 as a buyout but instead just applied it against future payments. A few phone calls later and it appears to be sorting itself out.

    Total cost to own, after financing + credit union GAP of $399, comes to approx 52000. I will pay down the loan faster than scheduled to reduce the finance charge so as to reduce the overall cost closer to 51000 when all said and done.

    As a comparison, purchasing the vehicle outright, using KMF to finance @ 0.9 (remember in Mar it is/was 0.9 or 750 Bonus cash, not both) would have cost...
    49839...48074(purchase price) + 1765 (doc, title, reg, serv contract)
    plus tax = 53875 + finance at 0.9 = 55100.

    So, if i dont pay down my CU loan, i will have saved $3100. If i pay down the CU loan faster, i will have saved closer to 4000-4500. Either amount is certainly worth the extra few steps IMO. That variance will easily cover my Clear Bra, and Borla Exhaust for sure with some leftovers for other goodies as well.

    I will add that multiple people at dealer and KMF could not cogently explain this process so please dont rely on what they say. In another post, I explained exactly how this works based on the actual sections of the lease agreement and have completed the process verbatim to that explanation.

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  2. Congratulations! Can you tell me what the total tax paid on the purchase of the vehicle was (from lease inception to buyout)? Also what will your payments now be with this deal for 60 months?
  3. jwhollan

    jwhollan United States Active Member

    Great post and explanation. I'm going to be buying mine out in the next couple of months. When I did the math a month or two ago using my buyout quote online, I was going to come out ahead about $4500 (contingent on the finance rate of course, I estimated 3%) than if I would have bought it outright. Lease cash was $7200 on mine when I got it, so your results mirror about what I was expecting out of mine.
  4. Mach_Tuck

    Mach_Tuck United States Active Member

    All contained above....
    Tax on lease cash (328)
    Tax on first payment (57)
    Tax on buyout (3600)

    Yep, unfortunately the registration and lease fee and doc fee were almost $2k which ate into that savings...

    I did get the 4yr/60K full coverage plus some(1 free battery, 1 free alignment, key fob replacepent, etc) service contract for $1 over cost so i think i came out ahead in all the areas.
  5. netmag

    netmag United States Member

    Was KIA still offer 0.9 for 60 when you bought the lease out? If so then did you go with the CU loan for some other benefit or is there something to be wary of when financing through KIA? I've heard about them not applying any extra payments to the principle without being explicitly asked to do so, but just wondering if there might be any other reasons.
  6. netmag

    netmag United States Member

    On second thought, perhaps you actually meant 72 months at 2.49% ?
  7. Mach_Tuck

    Mach_Tuck United States Active Member

    KIA will NOT offer the 0.9 on a lease buyout else i certainly would have done that. Credit union is 60 month at 2.49%. Best rates around for new/used car as they dont make a difference. Traditional banks were are 4.0+

    IMO financing a car longer than 60 months is not wise in that finance charges become unreasonable high. My goal is to pay to car down in 3yrs so that will almost equate to a 1% finance fee. Id rather have more equity quicker than lower payments and higher finance fee over longer term. Again, just my opinion as i understand financial situations are highly variable.

    With regard to extra payments...what they did was BS...i sent the buyout amount to the buyout payment address with title application application/release paperwork and the odometer disclosure and they put the amount onto the account for future use. No excuse for that, simply no excuse.
  8. Can you tell me how long it took for KMF to send the actual vehicle title to you after completion?
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  9. Berzerker

    Berzerker United States Active Member

    They're only unreasonably high if you actually pay it off over the full >60 month period. If you plan on paying it off early (like I am), it starts to matter less. I took the easiest deal I could make (75 month finance) knowing that I'd be paying it off early, to not get the massive amount of hits to my credit report while they scoured banks to find me the "best interest rate." Scheduling my autopay to get it done in 48 months I'm only paying about $500 more than if I had done a lower interest rate at 48 months.

    That also gives me the flexibility to skip payments if financial issues ever arise in the next few years.
  10. Mach_Tuck

    Mach_Tuck United States Active Member

    They said ten business days...it's been two so far.
  11. Mach_Tuck

    Mach_Tuck United States Active Member

    Great plan. As long as you are disciplined.

    2.49 @ 60 was best deal for me.

    I take the same method when playing blackjack. Lower limit table and higher bets but nice to drop to min if needed :thumbup:
  12. Was the tax added to the loan amount or was that paid at the DMV?
  13. capnsharpe

    capnsharpe United States Member Sustaining Member

    I've been waiting since March 13th for my title. Long story short... the last customer service rep I spoke with on Friday said that Kia/Hyundai doesn't mail titles after a lease buyout. Needless to say she was either an idiot or Hyundai is engaged in blatantly illegal activity as the Commonwealth of Massachusetts requires the title to be released within 3 business days of the check being cashed, with the title in hand within 10 business days. Luckily I've got everything tracked to prove I held up my end of the bargain, but right now it looks like Hyundai stole $37k with basically no recourse.
  14. Mach_Tuck

    Mach_Tuck United States Active Member

    The tax was included in the buyout amount. Mine was $44k and tax brought the total buyout to $48k. KMF needs to pay the tax authorities as far as i am concerned.
  15. Mach_Tuck

    Mach_Tuck United States Active Member

    Yeah, still working on this too. Mine was paid by a credit union so I'd imagine they will start to hamper KMF if the title is not properly released to them in a timely manner. The CU is not the "technical" owner of the car.

    I seemed to get hung up on by the automated system with KMF so getting to a human takes a few calls each time.

    KMF just sent me another Odometer Disclosure also so not sure what the hell is going on now. At least my KMF account summary still shows zero payments due.
  16. CO-bound

    CO-bound United States Member

    Yeah good luck getting that title in 10 days; I've been waiting since JANUARY for it to be mailed out. Five different reps AND a supervisor on the "escalation team" have said it "will be mailed out within three business days". Those must be mosquito days, because, again, been drumming my fingers on the desk since January (to be specific, I faxed the odometer statement exactly 3 months ago today).

    KMF's incompetence is truly epic; six 20+ minute phone calls and still empty-handed....
  17. Big

    Big Ireland Newish Member

    Hi Capnsharpe - Wow that sounds like a real hassle for you. I'm also from Massachusetts (greater boston area) and will be signing my lease this weekend. What dealer did you use?
  18. capnsharpe

    capnsharpe United States Member Sustaining Member

    Lev Kia in Framingham. I worked with Tony Doheny
  19. I just finished my buyout as well, just waiting on title.

    Because I live in Texas, paying tax twice is the reality and would have tanked my deal as it was more than I wanted to pay. My dealer here is awesome and found a way around the double tax. The dealer gave me the 36 month lease cash on a balloon financing term. As it was considered purchase vs. lease, the title was in my name along with Kia. When I refinanced through my Credit Union, I was not charged tax again. An option to consider for those in states like TX...
  20. my lease buyout, first person at Kia financial sent the wrong information, had to get the credit union and several phone calls to get the right information. check was sent to Kia and they applied it as a payment. Had to call several times to get it corrected. Is it people that don't know what they are doing or is something else going on. Bad experience all around.
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