Lease then Buyout - Contract Explanation

[Falaris]

Only question I have is how do I find out my balance and pay it off quickly? Do I have to wait several weeks to get my lease payment book in the mail?

My dealer told me 3-4 weeks. Turns out they enter the months leases all at once it seems. It took mine about 3 weeks to show up. You can check at kmfusa.com and keep trying to register your VIN and if it says not found it is not entered yet on the site. You could also call your dealer daily until they get it entered. Once it is entered you can register and see the buyout quote option immediately. It is off one of the tabs at the top.

Congrats on your new Stinger!

-Fal

 

[Kia Stinger]

I want to THANK each of you for your help. I was able to take advantage of this Lease/Buyout yesterday. Leased a GT2 AWD (Sticker of $52,300 plus tinted windows and other extras) at $50,000 plus the $7,200 lease bonus.

Ill pay the whole balance off as soon as I can .

Only question I have is how do I find out my balance and pay it off quickly? Do I have to wait several weeks to get my lease payment book in the mail?

Again, THANKS!!! This post really saved me money...

Congratulations! I'm glad to hear you negotiated a great deal on a Stinger GT! And I'm even a little more happy to hear that the existence of this site/forum had something to do with it! That's what we're here for.

 

[MarkyMark]

Is it weird that I am a kia sales rep who is also named Brian Lewis?

Yes, yes it is very weird. You just scared all of us! ; )

 

[MarkyMark]

I want to THANK each of you for your help. I was able to take advantage of this Lease/Buyout yesterday. Leased a GT2 AWD (Sticker of $52,300 plus tinted windows and other extras) at $50,000 plus the $7,200 lease bonus.

Ill pay the whole balance off as soon as I can .

Only question I have is how do I find out my balance and pay it off quickly? Do I have to wait several weeks to get my lease payment book in the mail?

Again, THANKS!!! This post really saved me money...

Congrats!!!

You wait about 4-6 work days and at Kia Financisl’s Website, you should be able to log into your lease program and request to do a complete buyout.

Don’t need to deal with the dealer whatsoever.

You will get a week or so of interest from the first month (however long You wait) and then just the principal balance of remaining months to pay, along with the residual price, and a $300 (or was it $400), buyout fee.

 

[NYLAWBIZ]

Hi all. Does anyone have a specimen lease agreement? I am in the process of pulling the trigger on a GT2 and I sure like the lease/buyout maneuver to turn the $7,000 lease cash in to real cash. I called KMF and asked them if I can see a copy of the specimen lease, and they directed me back to the dealership (big surprise). But getting into conversation with the KMF service rep on the phone, I asked him if he has had people doing the lease/buy out thing. He said that it doesn't work that way, and day in and day out people who want to buy out their lease early pay the remaining rent payments, residual, and $300 fee. No way the lease/buyout works. What do you think? Is it something limited to certain states?

 

[Mach_Tuck]

Hi all. Does anyone have a specimen lease agreement? I am in the process of pulling the trigger on a GT2 and I sure like the lease/buyout maneuver to turn the $7,000 lease cash in to real cash. I called KMF and asked them if I can see a copy of the specimen lease, and they directed me back to the dealership (big surprise). But getting into conversation with the KMF service rep on the phone, I asked him if he has had people doing the lease/buy out thing. He said that it doesn't work that way, and day in and day out people who want to buy out their lease early pay the remaining rent payments, residual, and $300 fee. No way the lease/buyout works. What do you think? Is it something limited to certain states?

I posted the actual contract sections at the start of this thread. The person you talked to has no idea what it actually says. I am not surprised as most people who buy out a lease are more than likely towards the end of the lease.

I have the contract at home and will post the contract sections this evening so you can read for yourself. I dont imagine KMF is using different lease agreements for different states. That just doenst make any logical or contractual sense.

Call that KMF rep back and ask him/her to explain the following Lease Contract Sections to you.
Sections 9, 22D, and 23B. Its all black and white in those three sections.

 

[MarkyMark]

@Mach_Tuck is exactly right. The KMF rep is either trying to dissuade you from doing this, or they are clueless.

A lease is a loan packaged in a very interesting way.

As with any loan, car, mortgage, etc... you can pay in advance the Principal of that loan and legally, the bank/finance company can NOT charge you interest when doing so - AKA the Rent Charge.

On another Forum I have seen the actual buyout paperwork from KMF, and it is exactly as it should be. Just the steam of depreciation amount (stream of payments remaining within the lease) WITHOUT the Rent Charge (interest).

Granted, Lease Cash is designed to be thrown around via dealers as “bonus cash” or “lease discount” or whatever and however they want to talk about it to get a car sold. KMF would never state that, but it’s for dealer benefit and marketing.

Kia simply sells the car for a massively reduced discount, while it’s finance division makes that up in spades.

At the end of the day, 95% of people leasing a car have no clue how it works, and if they added it all up, it is typically more than the MSRP of the car. But we like having what we cannot afford, and for those that have every little or almost nothing to put down, can get pulled in quickly. They cannot afford to buy the car, it they could “afford” to pay that lower monthly for 3 years... and they forever get into a car rental box.

Now, there are clearly others who have money, or they get a corporate car allowance, so they just go lease the fanciest car they can. Got it. Everyone is in a different situation, I just feel for the people that get into these lease programs and have no idea.

I have a family friend, former CEO of a major corporation - retired. He leases Mercedes every two years - says he has no idea how they can possibly make money doing it. Ha!

 

[0FSGVN]

So basically, if I go in to lease the vehicle. The cost I should be paying in an ideal world = (~50% of MRSP) - lease incentives. And if I can pay the cost of the lease up front, I save on the additional "rent" cost. Is that right? And with good credit I can pretty much argue away the down payment and get a marginally higher monthly payment. Is that how this works?

 

[NYLAWBIZ]

I just spoke with KMF payoff division supervisor. Going through the lease terms, he agrees with Mach_tuck.

 

[MarkyMark]

So basically, if I go in to lease the vehicle. The cost I should be paying in an ideal world = (~50% of MRSP) - lease incentives. And if I can pay the cost of the lease up front, I save on the additional "rent" cost. Is that right?

Well, you are getting there. There is a LOT to this and if you don't know the system you'll get taken quickly.

Which EXACT model do you want? I'll then lay every step out for you and it should help others also. Thanks OFSGVN.

 

[0FSGVN]

Well, you are getting there. There is a LOT to this and if you don't know the system you'll get taken quickly.

Which EXACT model do you want? I'll then lay every step out for you and it should help others also. Thanks OFSGVN.

Looking at a GT1 RWD, unless they decide to make a GT2 really tantalizing. Thanks in advance!

 

[Mach_Tuck]

As with any loan, car, mortgage, etc... you can pay in advance the Principal of that loan and legally, the bank/finance company can NOT charge you interest when doing so - AKA the Rent Charge.

This is GENERALLY true. However, I have seen some lease contracts that DO include the remaining RENT as part of the buyout so it is imperative that you UNDERSTAND WHAT IS BEING SIGNED.

If you agree and sign a contract you dont understand, there is no one to blame but yourself

 

[Atheleus]

Just wanted to add my experience if it is useful:

Leased the GT2 AWD, sticker $52,300 and negotiated price of vehicle to $48,214.16 on 1/31/18. After taxes, title, AQ fee, etc, final gross cap cost was $50,535.33. Subtract $7,200 lease bonus, and I turned around and bought this beauty for a grand total of $43,335.33. KMF was a breeze to work with. With these lease deals right now, I have no idea why anyone would do it differently if buying is the ultimate goal.

 

[MarkyMark]

Congrats!!!

You wait about 4-6 work days and at Kia Financisl’s Website, you should be able to log into your lease program and request to do a complete buyout.

Don’t need to deal with the dealer whatsoever.

You will get a week or so of interest from the first month (however long You wait) and then just the principal balance of remaining months to pay, along with the residual price, and a $300 (or was it $400), buyout fee.

Wow, that's a SLOW dealer. They should process this within a few days. Thinking about this, sale or lease, it's a "sale" to the dealer as credit for moving a car. Thus, I should think - maybe - mid-end of month, they'll cram it through their process quickly to get that car sale by month's end?... hmmm...

 

[Motosanto]

First, I am so thrilled I found this forum! Further, I want to thank all of you for your help! This an option I hadn’t considered previously so I would like to confirm my understanding and assumptions. Here is where I am on my deal.

GT2 AWD - Sticker $52,375 - Price currently offered $51,254 -as I recall this does not include taxes, doc, delivery etc.

After reading all of this I just want to confirm my understanding of your collective experiences and make sure I am negotiating all of the deal points in the CORRECT order.

(I will get all of this in writing from the multiple dealers I am negotiating with)

1. Negotiate lowest possible purchase price - regardless of the transaction type - Lease or purchase. It looks like Atheleus negotiated the lowest price I have seen ($48,214). Is this a realistic goal? Has any other forum member met or beat that price?

2. Request Costco Membership discount $500.

3. Verify and negotiate all dealer/doc fees in writing.

4. Verify sales tax (7%) and determine if my state (UT) requires prepayment of “rent or interest” in an early lease buyout?

4. Confirm current Lease Rebate - For this example $7,200?

5. Confirm Residual - 50% Purchase Price - $25,627

And in simple terms when the above has been confirmed the steps would be as follows:

1. Lease the Car - Make first months payment $663.26 + deposit if necessary 663.26 - Total - $1,326.52 (approx.)

2. In approximately 30 days I will be able to payoff the loan for approximately the following:

Purchase Price - $51,254
Dealer Fees 1,000 (approx.)
Sales Tax $3,970 (approx.)
1st Month -$1,326.52
Lease Rebate -$7200

Total PayOff - 47,697.48 (Approx)??

 

[bugaboo90]

Could you or @Brian@shottenkirk explain the rental charge thing. What info should I look at on my lease paperwork to understand this charge? I just leased the car early feb and next payment is due soon. thx

@Brian@shottenkirk is absolutely correct. The lease cash is made back over the life of the lease as the RENT charge. Hopefully the rent is lower than the lease cash otherwise you are getting taken on the lease deal.

Lease then buyout IMMEDIATELY is the only benefit here. DO NOT wait till into the lease to buyout as you would have paid unnecessary rent fees.

 

[NYLAWBIZ]

Attached is a specimen lease form provided from my dealership.

 

[MarkyMark]

Attached is a specimen lease form provided from my dealership.

Thanks @NYLAWBIZ - Great to review! Thank you!

 

[Mach_Tuck]

Could you or @Brian@shottenkirk explain the rental charge thing. What info should I look at on my lease paperwork to understand this charge? I just leased the car early feb and next payment is due soon. thx

RENT is calculated as follows - (Adjusted Cap Cost + Residual) * Money Factor. This would give you the total for the term. Divide that by term to get the monthly rent charge. I believe the lease only shows the total.

It can be viewed as the "interest" on the lease. However, it must be thought of as "two pieces of interest." One for the loan to cover the lease (adjusted cap cost) and one to cover the "asset (the physical car)" in your possession. Most of the time, the rent charge is very close to the lease cash...hopefully never more.

 

[Brian@shottenkirk]

Could you or @Brian@shottenkirk explain the rental charge thing. What info should I look at on my lease paperwork to understand this charge? I just leased the car early feb and next payment is due soon. thx

Ok so on a lease there isn’t an “interest” the term they use is called a money factor. Now the money factor is basically your interest and your “rent” charge. If you choose to buy a lease out early you are responsible for the remaining payments, and taxes on the second half of the vehicle. The lease payments you are paying now only include taxes for the portion of the car your using..the depreciation. So generally if you pay the whole lease off and buy the car out in the end even with your lease cash you still end up paying more for the car than if you just purchased it. Now if you go a different bank and refinance the lease for a purchase, or just write a check for the remaining balance you will save money on the interest. In the end saving you more money. The longer you wait in a lease to buy it out, the more you are paying for the car.