Lease then Buyout - Contract Explanation

[DanielN]

So I'm trying to complete a lease buyout and didn't put anything down when I leased the car. I went to my credit union and got pre-approved to cover the $42,000 that the loan buyout document states. But I want to put down $5000 cash to lower the loan amount to $37,000. The credit union stated they only fund it based off the loan payoff request and that I would have to pay $5000 to KMF first to change the buyout amount. Would this be the correct way of using my $5000 cash? Will the $5000 cash be applied appropriately if I paid it to KMF first? I would rather get a loan for $37,000 from the bank and add my $5000 to cover it one check.

 

[Waynerm002]

Based on what I read, if the bank gives you $42K and you have $5k to use, you can pay that to the bank after getting the loan. Unless you are concerned about the interest rate based on the amount/time you are borrowing, then you can pay KMF and wait for it to clear then get a new buyout number.

 

[DanielN]

I spoke with KMF and they apply it towards future lease payments and not the buyout amount. So my best interest is to reduce the buyout amount.

 

[StingEm]

I spoke with KMF and they apply it towards future lease payments and not the buyout amount. So my best interest is to reduce the buyout amount.

Just have the credit union buy it out and then send them the $5000 check towards the principal.

 

[MasteR.Legend]

My first reply/post. Can someone clarify this. I haven't read this whole thread but here's the question. From abreliable source I was told the lease cash does not affect your buy out price. So it does not take money off the msrp or residual where your residual is less let's say the 6 k in lease cash. Is this true or does the lease cash really help your buy out less that ammount? Thanks

 

[DanielN]

Just have the credit union buy it out and then send them the $5000 check towards the principal.

They said it doesn't change the monthly payment which I think is ridiculous.

 

[Paul32]

They said it doesn't change the monthly payment which I think is ridiculous.

Seems to me that you should have told the Credit Union you wanted to purchase the leased car with a $5,000 down payment?

 

[shaggystinger]

They said it doesn't change the monthly payment which I think is ridiculous.

Unfortunately, my credit union told me the same thing. The amount goes to principle but will not affect the monthly payment.

My first reply/post. Can someone clarify this. I haven't read this whole thread but here's the question. From abreliable source I was told the lease cash does not affect your buy out price. So it does not take money off the msrp or residual where your residual is less let's say the 6 k in lease cash. Is this true or does the lease cash really help your buy out less that ammount? Thanks

Gotta read through the thread. There is some invaluable info on here if you plan on doing the lease buyout. Quick answer to your question is, which ever source you have is misinformed. MSRP - negotiated price - leasecash + tax, tag, title, doc fees etc. + aquistion fee ($650) and finally add the $300 buyout fee KIA charges. This is your buyout amount. On your lease paperwork your Adjusted Capitalized Cost (Net Cost) is what your buyout amount will be. The only caveat to this is if you are in a state that has your taxes baked into each lease payment. You will end up paying taxes on the residual amount when you go to complete your lease buyout. Read up. It's worth it!

 

[MasteR.Legend]

Ok he said lease cash only takes off the lease payments. I'll go to the dealer and check. Did you clarify through Kia that the lease cash definitely takes off the msrp/residual to lower the buyout? I'm in Nj so they charge taxes on the lease and then taxes again if you buyout so double taxed which sucks. I'm not sure if the buyout tax is on the residual or the total msrp again on buyout.
I know someone who works for a lease company these are numbers I got. He's always gotten me great prices through the years:
Taxes and all included in down payment price.

2018 Kia stinger awd base

35k sticker

376$ 36m 10k Miles per
Total due of 1951$.

2018 Kia stinger premium awd

40k sticker

433$ 36m 10k Miles per
Total due of 2116$

 

[shaggystinger]

Ok he said lease cash only takes off the lease payments. I'll go to the dealer and check. Did you clarify through Kia that the lease cash definitely takes off the msrp/residual to lower the buyout? I'm in Nj so they charge taxes on the lease and then taxes again if you buyout so double taxed which sucks. I'm not sure if the buyout tax is on the residual or the total msrp again on buyout.
I know someone who works for a lease company these are numbers I got. He's always gotten me great prices through the years:
Taxes and all included in down payment price.

2018 Kia stinger awd base

35k sticker

376$ 36m 10k Miles per
Total due of 1951$.

2018 Kia stinger premium awd

40k sticker

433$ 36m 10k Miles per
Total due of 2116$

110% sure (if there is such a thing!). It's the main reason most of us are doing the lease buyout, to take advantage of the awesome lease cash KIA is offering. I am going through the lease buyout process as we speak. Focus on net cost during your negotiations and don't get hung up on lease payments.

As for the taxes, I live in one of the few states (maryland) that require you to pay taxes upfront on the entire loan amount. The double tax stuff is just crazy to me but it's the way it is. Good luck on your buyout!

 

[Waynerm002]

MasteR.Legend, spend some time reading through this thread, it will certainly give you some insights on this subject. Some states charge taxes on the leased portion, some on the entire car, up front. Others add it in the monthly payment. Use this to help you: Leasehackr Calculator

Also look up the rules on rebates in your state, don't go by what the sales folks say as they don't always tell the truth. You should be able to find everything online.

 

[MasteR.Legend]

Thanks

 

[Akriant]

I am considering jumping through the hoops to get a Stinger by leasing it first and the doing a buy-out of the lease by financing through my local credit union.

However, the Kia Dealership I am talking with (they are 120 miles away from where I live) is super adamant that I can't do an early buy-out of the lease and instead I should finance at 5% through them to get the same incentive as I would if I lease the car and then do an immediate refinance through a credit union. That sounds kinda fishy to me, as the lease agreement (I assume) is the standard KMF agreement.

Any input on this?

 

[SilverNitr8]

I am considering jumping through the hoops to get a Stinger by leasing it first and the doing a buy-out of the lease by financing through my local credit union.

However, the Kia Dealership I am talking with (they are 120 miles away from where I live) is super adamant that I can't do an early buy-out of the lease and instead I should finance at 5% through them to get the same incentive as I would if I lease the car and then do an immediate refinance through a credit union. That sounds kinda fishy to me, as the lease agreement (I assume) is the standard KMF agreement.

Any input on this?

They are playing you. Ask them for a copy of a lease contract. On the back it shows that you can, you just pay the 300 buyout fee. Of course they want you to finance with them at 5%. They'll make a ton of money from you. Not only do you get less rebate, but you also give them more money from interest.

 

[StingEm]

I am considering jumping through the hoops to get a Stinger by leasing it first and the doing a buy-out of the lease by financing through my local credit union.

However, the Kia Dealership I am talking with (they are 120 miles away from where I live) is super adamant that I can't do an early buy-out of the lease and instead I should finance at 5% through them to get the same incentive as I would if I lease the car and then do an immediate refinance through a credit union. That sounds kinda fishy to me, as the lease agreement (I assume) is the standard KMF agreement.

Any input on this?

They aren’t being truthful (or are totally uninformed) about the lease buyout, but they may not be lying about the financing option if the dealer you are working with is in a state where Kia offers balloon financing. In which case they would be doing you a favor by pushing you towards the balloon financing since you would save the $600 lease origination fee and $300 lease buyout fee while still getting the full lease rebate that Kia offers. But there’s only a handful of states that offer balloon financing. There’s a thread in this sub forum that has info on that.

Edit: Just read an earlier post that you’re in Jersey. They’re definitely just lying about both. Find a different dealer or prepare to do a lot of homework to ensure you get the exact deal you should be getting when you go to sign the paperwork. That’s a good idea either way, but it helps to be working with a dealer that isn’t 100% dishonest. Shoot for 25% dishonest or better.

 

[MerlintheMad]

The difference between lease rebate cash and financing is ridiculous. For us it was $950 off if we financed and a rebate of $5,900 if we leased. No brainer.

 

[Todsulli06]

A sales manager here in Northern Virginia just told me he won’t lease me the car because I said I was going to buy out the lease.

He said “It matters to me due to our franchise agreement with Kia. If I lease someone a vehicle to attain a rebate knowing there is no true intention of following through on a contract we get charged back the amount of the rebate and could incur other penalties.”

Is there any truth to that? I said fine I’m going to go lease one from your competitor and you just lost a sale.

 

[SilverNitr8]

A sales manager here in Northern Virginia just told me he won’t lease me the car because I said I was going to buy out the lease.

He said “It matters to me due to our franchise agreement with Kia. If I lease someone a vehicle to attain a rebate knowing there is no true intention of following through on a contract we get charged back the amount of the rebate and could incur other penalties.”

Is there any truth to that? I said fine I’m going to go lease one from your competitor and you just lost a sale.

That's BS. Show them a copy of the lease contract posted here. As the leasee you have every right to buy out your lease whenever you want to. You just pay the buyout fee of 300.

Also buying out your lease is not the same as terminating you lease early.

 

[Todsulli06]

That’s what I thought but do they get charged back the rebate they gave out?

This is why I hate dealing with lower end dealerships from the customer service to bait and switch pricing. If kia wants to up their image not only are they going to need to do it with their cars but also with the dealerships.

 

[SilverNitr8]

Some dealers ask you to wait 3 months before buying out your lease. You dont need to tell them you intend to buy it. Just lease the car and get the rebate. Once you have the car, you will deal directly with kia finance, not the dealership.

Whatever they lose from you buying your lease, I'm sure they made it back and more from the bonus they get meeting the quota.