Lease then Buyout - Contract Explanation

[Keigz]

Getting ready to purchase a new 2019 GT1 AWD from a dealer in NC next week and wanted to do the lease buyout trick to get the best price but i wanted to run this by you folks to make sure i understand how this will work.

I got the price on the car down to $40,181 and that does not include taxes or finance fee or anything and the dealer does not realize yet i want to lease it. So i tell the dealer i want to lease this vehicle and then determine what i get for my trade. Say i get 5k for it. I don’t want my payments to high when i get a loan so i need to put say 10k down now when i lease it. They will throw in approximately 7k in lease discount cash. So the balance would be approx 18k.....not including any taxes or stuff like that. I sign the paperwork and leave with my car. I then get a loan for a new car from the bank of my choice and call kia financing in a few weeks and get a payout which should be about 18k. I mail or pay online the balance with the money from my new loan and that is it. Does that make sense? Am i going to be doing this correctly?

Thanks in advance for the help and advice.

Jason

I am curious to see if this is how it would be done because this is exactly what I am trying to do next week here in Florida!

 

[Revvdmedia]

Getting ready to purchase a new 2019 GT1 AWD from a dealer in NC next week and wanted to do the lease buyout trick to get the best price but i wanted to run this by you folks to make sure i understand how this will work.

I got the price on the car down to $40,181 and that does not include taxes or finance fee or anything and the dealer does not realize yet i want to lease it. So i tell the dealer i want to lease this vehicle and then determine what i get for my trade. Say i get 5k for it. I don’t want my payments to high when i get a loan so i need to put say 10k down now when i lease it. They will throw in approximately 7k in lease discount cash. So the balance would be approx 18k.....not including any taxes or stuff like that. I sign the paperwork and leave with my car. I then get a loan for a new car from the bank of my choice and call kia financing in a few weeks and get a payout which should be about 18k. I mail or pay online the balance with the money from my new loan and that is it. Does that make sense? Am i going to be doing this correctly?

Thanks in advance for the help and advice.

Jason

On a lease, you are just paying the anticipated depreciation of the car. In Canada, I believe the residual value on a 4 year lease is 46% of MSRP on the top of the line Stinger here. Using that math and the fact I think your GT1 is about 45K, your residual would be about 20,700. If you DID NOT put 10K down, you are at 28,000 owing on the car after discounts and trade, you only need to pay about 8000 after interest on the lease over 48 months, around 170 a month. Your payout would be 20,700 at the end. If you put 10K down, you are at 18,000 owed on the car, but the residual is 20,700, so you've paid "too much" and would not be making any payment, I'm not sure it works that way.

Someone here might be better at the math, but if you intend to OWN the car, I do agree you should take advantage of any lease specific incentives to save money and then buy out, but the question is whether you ride out a sublet (low rate) lease @ 2.99 or whatever it is in the USA for the term, while saving money in an interest earning vessel, or if you do it the way you are thinking, you could be paying high interest on that 18K from a bank (4.99% or higher). Financially I think you would be further ahead to pay on the lease and save money on the side rather than take out the balance on a higher interest loan.

 

[stasek]

Getting ready to purchase a new 2019 GT1 AWD from a dealer in NC next week and wanted to do the lease buyout trick to get the best price but i wanted to run this by you folks to make sure i understand how this will work.

I got the price on the car down to $40,181 and that does not include taxes or finance fee or anything and the dealer does not realize yet i want to lease it. So i tell the dealer i want to lease this vehicle and then determine what i get for my trade. Say i get 5k for it. I don’t want my payments to high when i get a loan so i need to put say 10k down now when i lease it. They will throw in approximately 7k in lease discount cash. So the balance would be approx 18k.....not including any taxes or stuff like that. I sign the paperwork and leave with my car. I then get a loan for a new car from the bank of my choice and call kia financing in a few weeks and get a payout which should be about 18k. I mail or pay online the balance with the money from my new loan and that is it. Does that make sense? Am i going to be doing this correctly?

Thanks in advance for the help and advice.

Jason

Couple things of note.
First - yiur lease price and purchase price will be different. On a purchase side, in addition to the $4k retail cash, there should be $3k dealer cash available, making the total rebate $7k. On the lease side, your best bet is to do a 2 year lease, since that should give you $10,600 in lease rebate.
You need to tell the dealer that you’re leasing, and ask for his dealer discount (should be at least 10%+). From there, subtract the $10,600 to get the selling price.
Second - don’t put ANY money down on the lease! If you’re trading in the car, have them cut you a check. And most importantly, don’t throw another $10k cash at it until you do the buyout. If something should happen to the car before the buyout, you’d most certainly lose all the money you put down! Good luck!

 

[fast88fox]

Couple things of note.
First - yiur lease price and purchase price will be different. On a purchase side, in addition to the $4k retail cash, there should be $3k dealer cash available, making the total rebate $7k. On the lease side, your best bet is to do a 2 year lease, since that should give you $10,600 in lease rebate.
You need to tell the dealer that you’re leasing, and ask for his dealer discount (should be at least 10%+). From there, subtract the $10,600 to get the selling price.
Second - don’t put ANY money down on the lease! If you’re trading in the car, have them cut you a check. And most importantly, don’t throw another $10k cash at it until you do the buyout. If something should happen to the car before the buyout, you’d most certainly lose all the money you put down! Good luck!

Many thanks to Stasek and Revvdmedia for the advice. That gives me a lot more info then I had. I am going to follow your advice and tell the dealer when I see them on Wed. that I plan to lease the car. I am hoping that will get me another 10k or so off like you stated bringing the car down to approx 30k before taxes and such. I will get the buyout from kia in a few weeks and then take the cash I had to put down and the trade in money and I should only have to finance about 15k. The only concern I have is my new loan then. I guess I can give the money to the bank at the time of the loan and get one check to mail to kia or have them deposit the cash into my account and use the account numbers over kia's payment service. The thing I worry is that I have always in the past had the bank write a check to the dealer for payoff so they get the title. I assume they will trust me to do it if they just deposit it into my account?

Jason

 

[stasek]

Many thanks to Stasek and Revvdmedia for the advice. That gives me a lot more info then I had. I am going to follow your advice and tell the dealer when I see them on Wed. that I plan to lease the car. I am hoping that will get me another 10k or so off like you stated bringing the car down to approx 30k before taxes and such. I will get the buyout from kia in a few weeks and then take the cash I had to put down and the trade in money and I should only have to finance about 15k. The only concern I have is my new loan then. I guess I can give the money to the bank at the time of the loan and get one check to mail to kia or have them deposit the cash into my account and use the account numbers over kia's payment service. The thing I worry is that I have always in the past had the bank write a check to the dealer for payoff so they get the title. I assume they will trust me to do it if they just deposit it into my account?

Jason

I would be shocked if you can get the dealer to discount the car that much. Assuming the MSRP is ~$50k, you might get them to (maybe?) $44-$45k before the lease rebate, getting you to maybe $34-$35k. Add acquisition fee, TTL, doc, etc.... and your adjusted cap cost is probably $38k+ depending on where you live (could be higher if your state requires taxes to be paid on full price of the car vs
only depreciated value. My guess is, after all is said and done (post buyout), you’re looking at ~$40k minimum.

Unfortunately, $30k is GT or 2.0T Premium money (maybe slightly less). Good luck!

 

[fast88fox]

I would be shocked if you can get the dealer to discount the car that much. Assuming the MSRP is ~$50k, you might get them to (maybe?) $44-$45k before the lease rebate, getting you to maybe $34-$35k. Add acquisition fee, TTL, doc, etc.... and your adjusted cap cost is probably $38k+ depending on where you live (could be higher if your state requires taxes to be paid on full price of the car vs
only depreciated value. My guess is, after all is said and done (post buyout), you’re looking at ~$40k minimum.

Unfortunately, $30k is GT or 2.0T Premium money (maybe slightly less). Good luck!

I am a bit confused then. They quoted the car to me thinking I am getting it financed or paying cash at $40k. I assume if I tell them I want to lease the car they would then take the $40k and then give me the lease cash (I am just estimating but I thought the kia website had $7200 listed for a 20 model) so roughly 33k or maybe the 10k from you said so 30k for the car lease. Is that not how it works? I guess I am just a bit more confused then I thought. I do appreciate you putting up with my questions tho.

Jason

 

[stasek]

I am a bit confused then. They quoted the car to me thinking I am getting it financed or paying cash at $40k. I assume if I tell them I want to lease the car they would then take the $40k and then give me the lease cash (I am just estimating but I thought the kia website had $7200 listed for a 20 model) so roughly 33k or maybe the 10k from you said so 30k for the car lease. Is that not how it works? I guess I am just a bit more confused then I thought. I do appreciate you putting up with my questions tho.

Jason

Unfortunately it doesn’t work that way. Assuming you’re buying the car, there is a $4000 “Retail cash” rebate available from Kia and more then likely a manufacturer to dealer “trunk money” incentive of $3000 (available in Illinois). Add to that the dealer discount, and you’re getting ~$12k off MSRP (assuming $5k dealer discount). If you’re leasing, the retail cash and manufacturer to dealer “trunk money” go away, and all you’re left with is the “lease cash” of $10,600 (assuming 24 month lease) and dealer discount (same as before, $5k) for a total of $15,600 off MSRP. The purchase and lease incentives don’t stack.

 

[fast88fox]

Unfortunately it doesn’t work that way. Assuming you’re buying the car, there is a $4000 “Retail cash” rebate available from Kia and more then likely a manufacturer to dealer “trunk money” incentive of $3000 (available in Illinois). Add to that the dealer discount, and you’re getting ~$12k off MSRP (assuming $5k dealer discount). If you’re leasing, the retail cash and manufacturer to dealer “trunk money” go away, and all you’re left with is the “lease cash” of $10,600 (assuming 24 month lease) and dealer discount (same as before, $5k) for a total of $15,600 off MSRP. The purchase and lease incentives”].

I thought that was to good to be true. So basically i either negotiate the price down like i have to 40k or i get a lease price based on msrp which was like 48k and get the lease cash. Sounds like it will pretty much be a wash either way. Just getting a loan for the car and being able to finalize it then with 0% interest will be easier then a lease and then buyout and getting a new loan.

I really appreciate your help in getting my brain wrapped around how the lease buyout works.

 

[stasek]

I thought that was to good to be true. So basically i either negotiate the price down like i have to 40k or i get a lease price based on msrp which was like 48k and get the lease cash. Sounds like it will pretty much be a wash either way. Just getting a loan for the car and being able to finalize it then with 0% interest will be easier then a lease and then buyout and getting a new loan.

I really appreciate your help in getting my brain wrapped around how the lease buyout works.

Yeah, with the extra $3k Kia is throwing at the dealers (at least around Chicago), the price difference between straight buy and lease buyout is not as big as before (due to acquisition and disposition fees). Now, another thing to take into consideration - the 0% financing generally doesn’t stack with any other rebates, so if you can get a loan from a credit union for 2-3%, you’re better off taking the rebates.

 

[BrandonH]

Yeah, with the extra $3k Kia is throwing at the dealers (at least around Chicago), the price difference between straight buy and lease buyout is not as big as before (due to acquisition and disposition fees). Now, another thing to take into consideration - the 0% financing generally doesn’t stack with any other rebates, so if you can get a loan from a credit union for 2-3%, you’re better off taking the rebates.

Is this 3k only on 2019's? I'm about to trade my 2018 2.0 for a 2020 GT1. And I found with the loyalty rebate for the 2020's combined with the lease rebates, the lease rebate was almost as high as a 2019 at least for a lease. But that 3k, if it combines with the 1500 loyalty and 4000 financing rebate would make buying instead of leasing pretty close and less hassle in the end, but I'm pretty set on a 2020 at this point.

Edit: Looks like the 4000 only applies to 2019 as well, right? Makes my question about the 3k not as important. I think I'll be going ahead with the 2020 24 month lease.

 

[stasek]

Is this 3k only on 2019's? I'm about to trade my 2018 2.0 for a 2020 GT1. And I found with the loyalty rebate for the 2020's combined with the lease rebates, the lease rebate was almost as high as a 2019 at least for a lease. But that 3k, if it combines with the 1500 loyalty and 4000 financing rebate would make buying instead of leasing pretty close and less hassle in the end, but I'm pretty set on a 2020 at this point.

Edit: Looks like the 4000 only applies to 2019 as well, right? Makes my question about the 3k not as important. I think I'll be going ahead with the 2020 24 month lease.

I have no idea about the ‘20s, but it’s definitely a “thing” for ‘19s, at least in Chicagoland. The dealer showed it to me once they realized they made a mistake applying the $2k to 2.0 Premium. Should have told them to pound sand (saga chronicled in the introduction thread), but in the end returned the car.

 

[quiXilver09]

This might sound like a stupid question and may have been answered somewhere but can you go to your own bank and "finance" the buyout and just get a typical loan at that point?

 

[Sabs]

Yes, you can.

 

[quiXilver09]

Yes, you can.

Awesome, thanks.

 

[livingSmoke]

Yeah, with the extra $3k Kia is throwing at the dealers (at least around Chicago), the price difference between straight buy and lease buyout is not as big as before (due to acquisition and disposition fees). Now, another thing to take into consideration - the 0% financing generally doesn’t stack with any other rebates, so if you can get a loan from a credit union for 2-3%, you’re better off taking the rebates.

Stasek and others...what do you think about this deal? Do you think I would be better off doing a 24mo lease then buyout through my credit union? I went on Kia's site and I don't see anything calling out some "lease cash" incentive. It just states X dollars a month for y months.

current deal:
I can get out of this deal for a couple of more days so feel free to be honest:

2018 GT RWD with 22,600 miles on it for $28,000 selling price / $30,010 out the door.

- drivers assistance safety package
- this is not a CPO vehicle
- micro blue
- single previous owner on lease

 

[livingSmoke]

I thought that was to good to be true. So basically i either negotiate the price down like i have to 40k or i get a lease price based on msrp which was like 48k and get the lease cash. Sounds like it will pretty much be a wash either way. Just getting a loan for the car and being able to finalize it then with 0% interest will be easier then a lease and then buyout and getting a new loan.

I really appreciate your help in getting my brain wrapped around how the lease buyout works.

Where are you finding a lease cash back offer on a 6 cylinder version? I'm in the northeast and the only lease specials they are doing are on the 4 cylinder.

 

[stasek]

Stasek and others...what do you think about this deal? Do you think I would be better off doing a 24mo lease then buyout through my credit union? I went on Kia's site and I don't see anything calling out some "lease cash" incentive. It just states X dollars a month for y months.

current deal:
I can get out of this deal for a couple of more days so feel free to be honest:

2018 GT RWD with 22,600 miles on it for $28,000 selling price / $30,010 out the door.

- drivers assistance safety package
- this is not a CPO vehicle
- micro blue
- single previous owner on lease

It ultimately depends on inventory levels where you are. If you can still find a remaining ‘19 GT, you’d probably be better off doing the 24 month lease to buy, since the incentives on ‘19s are little better. Sure, it would cost you couple thousand $ more, but you’d be getting a brand new car.
As far as incentives go.... Autobytel is pretty reliable OR do a search for “ Kia stinger lease Edmunds”. It’ll take you to stinger specific forum on Edmunds, where you can ask the moderators for location specific RV, MF, and incentives.
FWIW, the “deals” listed on manufacturer websites are generally not that good. More often then not you can negotiate a much better deal, as long as you understand what goes into the lease “deal”.

2019 Kia Stinger Incentives and Rebates | Autobytel.com

 

[livingSmoke]

It ultimately depends on inventory levels where you are. If you can still find a remaining ‘19 GT, you’d probably be better off doing the 24 month lease to buy, since the incentives on ‘19s are little better. Sure, it would cost you couple thousand $ more, but you’d be getting a brand new car.
As far as incentives go.... Autobytel is pretty reliable OR do a search for “ Kia stinger lease Edmunds”. It’ll take you to stinger specific forum on Edmunds, where you can ask the moderators for location specific RV, MF, and incentives.
FWIW, the “deals” listed on manufacturer websites are generally not that good. More often then not you can negotiate a much better deal, as long as you understand what goes into the lease “deal”.

Thanks Stasek! I just did a search on semi-local inventory near me. Hypothetically, are you saying this would be the outcome?:

2019 Stinger GT with MSRP of $42,500 at a dealership about 60 miles away from me.

What I do: Get a lease on this car for 24 months using Kia's financing
Math:
+42,500 msrp
-4,000 bonus cash / negotiation
-7,520 24 month lease incentive
= $30,980 before taxes, fees, etc
then after the dust settles after a week or so, I go to my credit union to buyout the car loan.

So considering a comparison between my current plan vs this plan it would be:

Buy Scenario (current):
2018 GT RWD with 22,600 miles on it for $28,000 selling price / $30,010 out the door

Lease & Buyout Scenario:
2019 GT RWD new for $30,980 selling price / ~$34,010 out the door

Pros:
- no miles and assurance of proper break-in
- One year newer model but I don't think this matters based on what I've read about changes
- 10yr/100k mile powertrain warranty vs. just the 5yr/60k on the used scenario

Cons:
About $4k more if my math is right.

Thanks for any feedback, this is a big decision for me.

 

[HDTurbo]

Finally a ‘20 GT1 AWD blue in my area as of today. MSRP 49280. The Edmunds forum says for 36/12 and 24/12:
.00192 MF and 55% residual. $8400 lease cash
.00182 MF and 50% residual. $6200 lease cash
Thoughts?

 

[Bmt134]

Can anyone break down their fees for a lease buyout? I am attempting to do a lease buyout in Pennsylvania, but my dealer states they have to do an inspection of the car and will charge at least an hour of service time to do it. I have not seen anyone else here state they had to do it. Just wondering if the dealer is trying to pull a fast one.