Lease then Buyout - Contract Explanation

[CVD]

That would be an extremely pleasant bonus. I take it that after the buyout KMF mailed you a title already in your name, no DMV trip required? I'm more familiar with how it works with used car private party sales, where the seller fills out their half of the title and then the buyer fills out their half of the title and takes it to the DMV to pay all the taxes and filing fees.

In the past I've only ever purchased used cars from private parties, this is both my first new car purchase and my first dealership purchase ever.

I’m slightly behind you in the process and MN as well. From my understanding you will need to go to the DMV and transfer the title to your name once you receive it from KMF. At this time you are on the hook for remaining taxes. If you go to your buyout page it lists the states in which KMF collects your taxes and MN is not one of them. My main concern is not having to pay taxes twice. I believe we paid some taxes up front on the lease and may not be on the hook for the full buyout amount in taxes. I could be wrong but I’m working to figure that part out.

 

[CVD]

I found what I was looking for. Box 14 in the paperwork identifies taxes and fees. Mine are $1628.97. I believe some or all of that number is sales tax on the depreciation over the lease term and as such should be deducted from what you owe to the DMV since you are no longer leasing the vehicle.

 

[Swap_File]

I did see a section in the MN tax guide that talks about lease cancellations, it sounds like in the event of the lease ending early you'd file for a refund on remaining months of tax. I'd think this would apply in a buyout situation, meaning, you'd pay the full tax at the DMV on the buyout but also apply for a refund on the lease tax you already paid, but I'd talk to an expert before doing anything.

revenue.state.mn.us/guide/leases
(Sorry, I'm too new to post links)

In my case, I had the lease taxes rolled into lease's monthly payments, and walked out the door without paying anything. From what I can see on KMF it looks like Kia (the dealership) paid my taxes for the entire lease as required in MN. Now that I am buying out the car, they won't be getting those monthly payments, and I think they would be the ones who would need to file with the state to get the remaining months back. I may have accidentally saved myself a bunch of paperwork...

 

[CVD]

When you rolled your taxes in it would have increased your adjusted cap cost, which in turn is your buyout amount though, right? So by doing it that way when you go to the DMV to register the car are you paying taxes on your taxes?? Since I assume you’re going to have to pay taxes on the buyout amount, right? I’m not sure if I’m correct here, just trying to understand it front to back so I don’t end up paying an extra grand in taxes.

 

[Swap_File]

paying taxes on your taxes??

Sounds possible, could be an extra $80-$100 in tax in my case. I'm still not sure what happens with the original ~$1000 in lease taxes, but no matter how it shakes out it's still way cheaper than buying the car outright without the lease buyout.

 

[Clipse2141]

Did you guys get details of your tax amount from Kia? I'm about to have to make a lease payment since can't get anything from them.

 

[ZaZ]

WOW! This info can be overwhelming, but very helpful.
Any VA owners complete the buyout process? Trying to see if I have to go to a KIA dealer and how much tax to pay (again) to DMV??

 

[General Klinger]

Did you guys get details of your tax amount from Kia? I'm about to have to make a lease payment since can't get anything from them.

I logged into my Kia account and chose the "Buyout Quote" under the payments. For the original state my address was set to (WA) it auto added the taxes into the buyout rate.

Certain states they won't auto add it into the buyout, so when I switched to my home state (VT) it removed the taxes and dropped my payment down.

 

[Swap_File]

MN Lease buyout Update: KMF sent me a notarized release with a letter saying I needed to go to the DMV to take action, but no actual title. I called KMF, and they told me there was no paper title, and to go to the DMV. I went to the DMV, and they said the paper title was currently on it's way to KMF (in KMF's name), and that my buyout had likely been faster than KMF and the DMV was processing it.

Now I need to wait another week for KMF to get my title, make sure they sign it, and mail it to me, and go to the DMV again. As expected, I will be on the hook for the taxes, approximately $2,600 in my case.

I also might be charged a $2 late title transfer fee, depending on what date KMF puts on the paperwork.

Note: The DMV did not want to verify my buyout amount in any way, but it might be a good idea to have a printout of your buyout statement for them just in case.

 

[Valkyriemedic]

Anyone have experience with doing the lease buyout in NC? Getting ready to start the process and the KMF site does not include NC with the states it says has the taxes figured in with the buyout amount. When I finance thru my CU, will they send write a check for the KMF buyout amount, but then add taxes to that for my total loan? I'm assuming this is how it will work?

 

[General Klinger]

Anyone have experience with doing the lease buyout in NC? Getting ready to start the process and the KMF site does not include NC with the states it says has the taxes figured in with the buyout amount. When I finance thru my CU, will they send write a check for the KMF buyout amount, but then add taxes to that for my total loan? I'm assuming this is how it will work?

Each bank is different. USAA deposited the tax amount and registration fees directly into my checking and I wrote a check direct to Vermont DMV. The total loan from the bank included the buyout, plus taxes and reg fees added together.

 

[CVD]

Anyone have experience with doing the lease buyout in NC? Getting ready to start the process and the KMF site does not include NC with the states it says has the taxes figured in with the buyout amount. When I finance thru my CU, will they send write a check for the KMF buyout amount, but then add taxes to that for my total loan? I'm assuming this is how it will work?

Check with your DMV. In my state I am individually responsible for going there in person with the title and cash or check to cover the sales tax. If I want to finance in the taxes I would need to figure out how much that would be, and then ask my credit union for that much more than my buyout, and have them deposit it into my account rather than including it in the buyout check. Every state handles this differently though and there’s about six different ways to do it.

 

[Swap_File]

During my initial lease signing I noticed the dealership charging me $100 as a document fee. This is legally limited to $75 in MN, but figured I wouldn't call them out on it since it was $25 and cheap ammunition if I ever needed to call them out on something else during the buyout process.

Someone at the dealership must have double checked the lease paperwork after I bought the vehicle out and noticed this fee, because I just got a check from the dealer for $25 plus interest with a description of document fee refund!

Still no title from KMF, I called them and they were very apologetic and said to call back in another week, and they sent another note to the title department to immediately forward the title to me when it arrives.

 

[StingerHopeful]

Does anyone know what is due at signing on a lease? I am putting $0 down and doing an immediate lease buyout. Do I just pay first month payment at signing? Then do I split the check, depreciation to the dealer and residual to KMF? Sorry if this has been asked before...

 

[robz32]

If you are doing a buyout right away, do not put anything down, you should not be required to do so either.

 

[StingerHopeful]

If you are doing a buyout right away, do not put anything down, you should not be required to do so either.

But what do I owe the dealer when I go pick the car up?

 

[MerlintheMad]

Does anyone know what is due at signing on a lease? I am putting $0 down and doing an immediate lease buyout. Do I just pay first month payment at signing? Then do I split the check, depreciation to the dealer and residual to KMF? Sorry if this has been asked before...

My lease contract says: "Amount Due at Lease Signing or Delivery", and lists "Capitalized Cost Reduction, First Monthly Payment, and Initial License, Title and Registration Fees."

(Interestingly, the "Capitalized Cost Reduction" is equal to the lease incentive - in my case, $5,900; this same amount shows up two more times: under "Rebates and Noncash Credits", and, "Capitalized Cost Reduction" in section "7. Your Monthly Payment is Determined as Shown Below"; so, I've always wondered how the leasor can offer a rebate, yet list it as an "amount due" that must be paid off at signing or delivery!? These questions I never even thought of as I leased my first brand new car: all I knew was that the final price was fair and I was willing to pay it. Then I did the buyout anyway, so it was all moot.)

 

[CVD]

But what do I owe the dealer when I go pick the car up?

I paid my taxes by choice, but I could have rolled that into the adjusted cap cost and walked out the door without paying a cent. Technically the first payment is due but the dealer paid that for me. I’m pretty sure that or anything else can be rolled into your adjusted cap cost to make for a true zero down lease.

 

[TStaino]

Every state is different.

1. Some states charges tax on cars price at front for lease and on buyout amount when you buy it out (so you paid approx 2x tax)
2. Some charge tax on leasing amount up front for lease and again on buyout. (you pay approx 1.5x tax)
3. Some state charge tax on monthly payment and on buyout amount. (you pay approx same tax)

If you have trade in then it makes a difference. In case 1 and 2 then will save up on up front tax on lease payments.

Any chance you know if the state of CT is case 1, 2 or 3?

 

[Sabs]

A few questions for those who've gone through the process, as I'll be sending payment soon:

1) Can you send a personal check for the buyout amount? I plan to mail to the overnight address via USPS.
2) Is this the correct odometer statement form that I should mail with the check?
3) Should I go ahead and fax the statement as well on the day the check is due to arrive since so many others have had problems? Or, wait to call customer service to see if they've received it a couple days after?