Lease then Buyout - Contract Explanation

[jd284]

Also recheck the lease cash I think they went up a few hundred for May, but ymmv

 

[gbears]

Unfortunately no. I didn't think you could negotiate that. I just tried to get the car price as low as possible to account for those charges. I was shooting to get under $40K before TTL at the very least and I was able to achieve that.

I don't think you can, which is why I was asking. Just remember on your lease sheet in the Gross capitalized cost Illinois will tax you on the lease cash and payments up front. Then you will also have to pay tax on the adjusted cap cost when you buyout.

 

[jd284]

I don't think you can, which is why I was asking. Just remember on your lease sheet in the Gross capitalized cost Illinois will tax you on the lease cash and payments up front. Then you will also have to pay tax on the adjusted cap cost when you buyout.

stinks to be in Illinois I guess! I thought CT was bad. Regardless it is still cheaper than CPO and financing from the beginning!

 

[TacoTuesday]

Hey guys I posted a few weeks back about how I was in negotiations a lease buy for a 2020 GT2. Just wanted to throw an update out there cause you all have been really helpful.

I was able to negotiate a dealer discount off of 1% below invoice (very fair IMO) and after lease cash (April’s) I would of had the adjusted cap down around 26% off of MSRP ~42k before TTL. I was happy with this. However...

I plan on keeping this vehicle for at least 10 years and with the refresh and all that comes with it being announced in a few months, I just couldn’t pull the trigger on it.

I feel bad for wasting the sales peoples time (I too sell vehicles) but I truly felt like I would be 5 months away from a serious case of buyers remorse if I went through with it.

Shooting for a win win situation next Winter/Spring with options on either a leftover 2020 GT2 or a ~*refreshed*~ 2021. Also, I’ll have saved additional thousands to go towards financing less. I know this is the best decision for me, but damn I’m depressed just typing this last bit out haha

Appreciate the community and can’t wait to officially join down the road

 

[nadal43]

Hey guys, I posted its own thread for this, but was thinking this might be the better place to ask for help:

I'm extremely close to leasing now and was about to sign all the paperwork today when the final Adj Cap Cost seemed a little off to me. I was wondering if those with experience can take a look at these numbers for me and tell me if everything adds up.

To keep it short, I've gotten a 2019 GT2 RWD reduced from ~$52k MSRP to $47k flat through a dealer discount. There is a lease incentive here in CA for 24 months of $12,120.

This brings my total down to $34,880 before fees. An amazing price. From reading through the threads I have read that the vast majority of taxes and fees are around $1.5k. Maybe $2k tops. So I was expecting a Net Cap Cost of ~$36,300.

The total Adj Cap Cost on the paperwork is $37,153.29. Bringing me up almost $2,300.
The numbers seem correct on DMV fees, Doc fees, acquisition, etc. I think the number increasing me so much is "Tax on Cap Cost Reduction." A value of $925.90.

However I haven't really seen this value very often in all of your lease breakdowns. I'm pretty sure we are responsible for this, or is it different in every state? I know in CA we aren't double taxed here, is there anyone with some insight on this? Btw keeping it simple with this one, I'm doing no trade-ins and no money down. They're only asking me to pay $600 for my first payment.

 

[jd284]

Looks like your state and county tax of 8.75% * cap cost reduction of 10,581.71

 

[nadal43]

Looks like your state and county tax of 8.75% * cap cost reduction of 10,581.71

okay I get that calculation now, thanks JD.

Do you think I could request the $650 Acquisition fee and $85 doc fee be removed from Gross Cap Cost and instead added to "Amount due at lease signing or delivery" column? This would reduce my Cap Cost Reduction value a little and therefore reduce my taxes on Cap Cost reduction further. I'm not sure why they they didn't include all fees in that column in the first place.

 

[jd284]

okay I get that calculation now, thanks JD.

Do you think I could request the $650 Acquisition fee and $85 doc fee be removed from Gross Cap Cost and instead added to "Amount due at lease signing or delivery" column? This would reduce my Cap Cost Reduction value a little and therefore reduce my taxes on Cap Cost reduction further. I'm not sure why they they didn't include all fees in that column in the first place.

Anytime, this stuff is complicated!

just to note, the $600 due is the difference between the total due and the gross rebate - they are just having you pay the difference. I think they just said it’s your first payment to make it sound simpler since your payments are actually 647.

regarding what you mentioned, it may be possible but I am not sure it will really make a difference. How they have it set up now, the acq fee and govt docs are paid throughout the length of the lease. If it is moved to total due they would just use the rebate to pay for it and add it to the 600 due at drive off already (600+650+85).

many people will say don’t do this, but I ended up using my trade equity and 1k down to reduce the payment. This gives me more flexibility since I can technically wait up to a year to buy it out and still get better rates (at the cost of the money factor “service charge” of course). I talked to my bank yesterday (bank of America) and they will only finance the buyout amount - I can’t put money down with them. So I will need to put my down payment to reduce the buyout amount directly into the Kia portal as a payment. This is very risky, I’m out that money if the car is totaled. But I suppose considering the current situation with covid it is not too risky since I am not commuting anyways.
TL;DR version, make sure you can apply a down payment with your bank. And also know lease buyout rates are higher than new vehicle rates. With tier 1 credit the best I can get is 3.04% for 72 mo vs 2.39% for 72 mo “new vehicle”

 

[2Slo4u]

Jd284 - In the next few months you should find a better financial institution. My credit union had no problems when I funded half of the buyout

 

[jd284]

Jd284 - In the next few months you should find a better financial institution. My credit union had no problems when I funded half of the buyout

thanks. I doubt I will find a better apr for a lease buyout though. I have no issue putting note down via kmf portal I’m not really driving much right now

 

[Pharmaoptions]

Okay so I have read through about 20 pages of this and am a little confused still I know this shits been repeated in here a million different ways but this is my first time buying anything big or even getting a loan besides federal school loans.

First: Essentially whatever the adjusted capital cost comes out to when I sign my lease is what I will end up buying the vehicle for when I do the lease to buy option + taxes and fees?

Second: When I sign the lease I will be required to make a KMF account because they will be the ones leasing me the vehicle? And then I will have to ask my bank for a loan to pay KMF to do the buyout then pay my bank the monthly payments? (Edit: Just read on another post that this is the case)

Three: How do I find out how much lease cash if being offered? I went to the Kia website and this is all I found for my area was $3k which seems wrong.

Four: How much money have you guys actually saved from doing lease to buy rather than leasing it then buying it or just buying it flat out?

This is the vehicle I am looking at getting its a 2020 Stinger GT2 and a great deal! I don't even have to negotiate down on the MSRP with them I just need to make sure I can get more than 3k worth of lease cash.

 

[2Slo4u]

View attachment 41607 View attachment 41608 Okay so I have read through about 20 pages of this and am a little confused still I know this shits been repeated in here a million different ways but this is my first time buying anything big or even getting a loan besides federal school loans.

First: Essentially whatever the adjusted capital cost comes out to when I sign my lease is what I will end up buying the vehicle for when I do the lease to buy option + taxes and fees?

Second: When I sign the lease I will be required to make a KMF account because they will be the ones leasing me the vehicle? And then I will have to ask my bank for a loan to pay KMF to do the buyout then pay my bank the monthly payments? (Edit: Just read on another post that this is the case)

Three: How do I find out how much lease cash if being offered? I went to the Kia website and this is all I found for my area was $3k which seems wrong.

Four: How much money have you guys actually saved from doing lease to buy rather than leasing it then buying it or just buying it flat out?

This is the vehicle I am looking at getting its a 2020 Stinger GT2 and a great deal! I don't even have to negotiate down on the MSRP with them I just need to make sure I can get more than 3k worth of lease cash.

View attachment 41607 View attachment 41608

For lease cash enter your zip code and select the trim you want
2020 Kia Stinger Incentives and Rebates | Autobytel.com

savings varies but by doing this on a 2019 GT2 I had an adjusted cap cost of $39k. MSRP was $55,400.

the deal you posted has a couple incentives that you may or may not qualify for

 

[jd284]

View attachment 41607 View attachment 41608 Okay so I have read through about 20 pages of this and am a little confused still I know this shits been repeated in here a million different ways but this is my first time buying anything big or even getting a loan besides federal school loans.

First: Essentially whatever the adjusted capital cost comes out to when I sign my lease is what I will end up buying the vehicle for when I do the lease to buy option + taxes and fees?

Second: When I sign the lease I will be required to make a KMF account because they will be the ones leasing me the vehicle? And then I will have to ask my bank for a loan to pay KMF to do the buyout then pay my bank the monthly payments? (Edit: Just read on another post that this is the case)

Three: How do I find out how much lease cash if being offered? I went to the Kia website and this is all I found for my area was $3k which seems wrong.

Four: How much money have you guys actually saved from doing lease to buy rather than leasing it then buying it or just buying it flat out?

This is the vehicle I am looking at getting its a 2020 Stinger GT2 and a great deal! I don't even have to negotiate down on the MSRP with them I just need to make sure I can get more than 3k worth of lease cash.

View attachment 41607 View attachment 41608

1. Yes, the number in the Kia portal will match your net cap cost plus state taxes if applicable

2. Yes, and you will want to shop around for rates. Try to get a new car rate if you can, many banks will only do the lease buyout rate which is higher than new

3. I used this site: Kia Incentives | Lease Deals | Cash Incentives and Special Financing | Martin Kia Newark DE

4. Several thousand. It really depends on the current incentives and dealer discounts. For example a 2019 GT2 has 5k Kia cash if you finance through Kia plus whatever dealer discount they have. And say the lease cash is 12,100

Kia cashback:
54000 - 4000 dealer discount = 50k, then 50k- 5kkia cashback = 45k plus taxes and fees at a "high" APR

Kia financing 0%
54000-4000 dealer discount = 50k + taxes and fees at 0%

Lease Cashback
54000-4000 dealer discount = 50k, 50k - 12,100 lease cash = 38k + taxes and fees.

There are some variations with the states regarding leases, please see this site: How a State's Tax Laws Can Impact The Cost of Your Car Lease – Carlease.com

In almost every case as long as the lease cashback is over 8k it is a better deal, and it becomes really sweet when the cashback is 10k+ in a state with favorable taxes.

The big catch is you have to have great credit to do this otherwise you will get shafted on the money factor and refinance APR

 

[nadal43]

1. Yes, the number in the Kia portal will match your net cap cost plus state taxes if applicable

2. Yes, and you will want to shop around for rates. Try to get a new car rate if you can, many banks will only do the lease buyout rate which is higher than new

3. I used this site: Kia Incentives | Lease Deals | Cash Incentives and Special Financing | Martin Kia Newark DE

4. Several thousand. It really depends on the current incentives and dealer discounts. For example a 2019 GT2 has 5k Kia cash if you finance through Kia plus whatever dealer discount they have. And say the lease cash is 12,100

Kia cashback:
54000 - 4000 dealer discount = 50k, then 50k- 5kkia cashback = 45k plus taxes and fees at a "high" APR

Kia financing 0%
54000-4000 dealer discount = 50k + taxes and fees at 0%

Lease Cashback
54000-4000 dealer discount = 50k, 50k - 12,100 lease cash = 38k + taxes and fees.

There are some variations with the states regarding leases, please see this site: How a State's Tax Laws Can Impact The Cost of Your Car Lease – Carlease.com

In almost every case as long as the lease cashback is over 8k it is a better deal, and it becomes really sweet when the cashback is 10k+ in a state with favorable taxes.

The big catch is you have to have great credit to do this otherwise you will get shafted on the money factor and refinance APR

Hey JD, can you correct me if I’m wrong but will
1) the buyout quote will be equal to the (adj cap cost - the first monthly payment you make at the dealer), then add in state taxes for the remaining amount?

 

[jd284]

Hey JD, can you correct me if I’m wrong but will
1) the buyout quote will be equal to the (adj cap cost - the first monthly payment you make at the dealer), then add in state taxes for the remaining amount?

yup thats correct, forgot first payment!

 

[Pharmaoptions]

Okay thank you everyone! Yeah it doesn’t look like in Michigan we have that good of deals to increase the cap cost reduction for 2020s, was hoping to get one down to 38,000 might just buy a used one.

 

[Lonz]

Okay thank you everyone! Yeah it doesn’t look like in Michigan we have that good of deals to increase the cap cost reduction for 2020s, was hoping to get one down to 38,000 might just buy a used one.

Not sure how much used AWD GT2's are going for, but if you're within a few thousand dollars of $38k, I'd probably just buy new. The way I look at it, Stingers are race cars, and I know I drive mine like a race car (hard and fast!). No other way for me! LOL! That being said, I don't think I'd want to buy a used one, knowing it was probably driven hard and fast (I'm just assuming). It's kinda like getting a hot new girlfriend knowing your buddy already banged her. LOL!

 

[nadal43]

I’m most likely going in to lease today guys! I was asked by the GM if there was anything he could do to seal the deal, what’s something you guys would recommend that’s a reasonable incentive?

Window tint? Remote start? Alarm system?

 

[jd284]

I asked for wheel locks lol

 

[nadal43]

I asked for wheel locks lol

Lol! Have those come in handy? Also the car comes stock with an alarm right? They don’t try to charge extra for it and threaten to remove it?