New Purchase, Lease Buyout. Any Gotchas?

[Guitarcrazy]

Hello. I am about to sign for a 2019 GT2 AWD, Ceramic and red. For the people who have already completed a lease buyout, is there anything I need to know before signing? Anything you would have done different? Thanks.

 

[Travis Wills]

Wow! That is a really great price for that vehicle. Normally I would say the interest rate is just crazy high but that won’t matter if you buy out the lease right away.

Are you planning on financing it after the buyout or are you paying cash for it?

That is a whole lot of car for even the lease price. That will be a screaming good deal if it can be rolled into a low interest loan.

 

[Guitarcrazy]

I am going to refi with my credit union. 2.75% for 5 years. Hard to pass up cheap money. The car is being brought in from another dealer so hopefully I'll have it in a week or two.

 

[Travis Wills]

I am going to refi with my credit union. 2.75% for 5 years. Hard to pass up cheap money. The car is being brought in from another dealer so hopefully I'll have it in a week or two.

The trade-in resell value of that car is over $40k. You can literally make money on the deal by selling to an online place like Carvana or Vroom.

 

[Revvdmedia]

10,300 rebate on top of a 6,271 off MSRP. Mother of god...

I'd do it.

 

[Guitarcrazy]

I am definitely buying it, I just want to make sure I don't make an error and complicate the lease buyout. I am hoping it is as straight forward as it seems.

 

[Ruturaj]

You have got yourself a super deal. After getting it do share dealer info so that others can take advantage as well.

 

[Guitarcrazy]

I bought on the last day of the sale so they called and made me an offer I couldn't refuse. I am waiting until I speak to the manager to see if he is ok with me giving their name on the forum. They do have 11 other Stingers available so I am sure they will be dealing on more. Might not be quite this much of a discount since the end of month pressure has passed, but I bet it will still be significant. He has a black with red GT2 and a GTS that he was really trying to move, but I didn't want either of those.

 

[Guitarcrazy]

If anyone has actually completed the lease buyout process I would appreciate any input on potential pitfalls. I would hate to make a clerical error and find out my buyout is affected. I might be overthinking it, but better safe than sorry.

 

[MerlintheMad]

I don't know of any "pitfalls". You go to your Kia account page and find out the buyout out amount; it updates with each payment. You write the cheque to HCA Exchange, Inc. Send it to the indicated address, and wait. I got my title in less than a month. If you have any questions, you call Kia and they take it from there.

 

[Hapa88]

I’m pretty sure it’s not a good idea to do this.
My understanding of how leases work is that the money factor (0.00248 in you case) converts to an interest rate of almost 6%. That amount is added to the lease and divided by the lease term. My understanding is that you get NO BENEFIT by paying it off early because the interest is already rolled into the lease payment amount.

I think it’ll end up being worse case where you end up paying the full price of the lease with a 6% interest rate, pay an early termination fee and then pay a higher interest rate for your new loan since it’ll be considered a “used car” at that point.

You will most likely be paying additional fees and will probably come out better if you can just buy the car with the 0% interest option from Kia Finance (assuming you have good enough credit).

Read the fine print of the lease terms before you sign and read this for additional details.
Ultimate Guide to Buying Out of a Lease Early | SuperMoney!

 

[Ruturaj]

I’m pretty sure it’s not a good idea to do this.
My understanding of how leases work is that the money factor (0.00248 in you case) converts to an interest rate of almost 6%. That amount is added to the lease and divided by the lease term. My understanding is that you get NO BENEFIT by paying it off early because the interest is already rolled into the lease payment amount.

I think it’ll end up being worse case where you end up paying the full price of the lease with a 6% interest rate, pay an early termination fee and then pay a higher interest rate for your new loan.

You will most likely be paying additional fees and will probably come out better if you can just buy the car with the 0% interest option from Kia Finance (assuming you have good enough credit).

Read the fine print of the lease terms before you sign and read this for additional details.
Ultimate Guide to Buying Out of a Lease Early | SuperMoney!

Nope, at least not with Kia/Hyundai finance.

 

[Ruturaj]

If anyone has actually completed the lease buyout process I would appreciate any input on potential pitfalls. I would hate to make a clerical error and find out my buyout is affected. I might be overthinking it, but better safe than sorry.

Depending on state, the tax for lease term might have been already charged to you and after doing buyout you will be paying tax on buyout price. Very few states charge up front though.

 

[Hapa88]

Nope, at least not with Kia/Hyundai finance.

If you have the language, I’d love to read it. Very interested in how this works.

As I see it now, my understanding is a lease buyout is basically paying it all out up front. So $533.86 x 24= $12,813.
Then you’d get a loan for $29,912 @ 2.75% for 60 months (so $32,051 after the loan is paid off)

Total that up and the cost is $32,051 + 12,813= $44,864 paid for the car plus any early termination fees. That’s assuming you didn’t wrap the first $12,813 into the same loan. If you take a loan for the whole amount then the total cost jumps to $45,778.

If you can just buy the car at $38,644 and get 0%, you would save yourself a ton of effort and over $6k-7k!

 

[Ecobust]

If anyone has actually completed the lease buyout process I would appreciate any input on potential pitfalls. I would hate to make a clerical error and find out my buyout is affected. I might be overthinking it, but better safe than sorry.

It's a simple process, with the only pitfall being the fact that the crew at kia finance is pretty incompetent and it may take a small eternity and lots of frustration to get your title released.

 

[Travis Wills]

When buying out a lease you do not incur the remaining interest charges but you would still be liable for any unpaid taxes, the balance of the remaining depreciation, the residual value of the car, and any applicable fees for buying out the lease.

 

[MerlintheMad]

Total that up and the cost is $32,051 + 12,813= $44,864 paid for the car plus any early termination fees.

Buyout does not incur a "termination fee", because you are not terminating the lease: you are finishing it abruptly by exercising your "option to buy" now instead of at the end of the lease. The same fee of $300 (for my situation) applied now or later, for opting to purchase the vehicle.

 

[Hapa88]

Buyout does not incur a "termination fee", because you are not terminating the lease: you are finishing it abruptly by exercising your "option to buy" now instead of at the end of the lease. The same fee of $300 (for my situation) applied now or later, for opting to purchase the vehicle.

I don't know the specifics of Kia Financials, that's why I asked to see the language if someone had it. But according to the website link I cited, they said this:
Ultimate Guide to Buying Out of a Lease Early | SuperMoney!

In summary, the typical costs to buy out of a lease and keep the car include:

• Buyout fees
• Transfer fees
• Early termination fee
• The residual value of the car
• Remaining payments on your lease
• Taxes

Keep in mind that the "remaining payments on your lease" include the calculated interest wrapped into that payment amount. So that's why I'm skeptical about whether you have to pay the remaining interest for the lease or not... Since I don't have the contract language, I can't tell for sure.

 

[Ruturaj]

When buying out a lease you do not incur the remaining interest charges but you would still be liable for any unpaid taxes, the balance of the remaining depreciation, the residual value of the car, and any applicable fees for buying out the lease.

Saw you clicked disagree on my post.

In new york (I do not have list of all states that do this but NY is one of them), if you lease the car, they charge you upfront on your total payments. That money is factored in to the capitalized cost, when you do buyout you have to pay those. For buyout taxes are calculated on buyout price, so you just paid taxes on depreciation + rent charge and at buyout paid tax on (remainder balance of car + previously paid taxes).

 

[Travis Wills]

Saw you clicked disagree on my post.

In new york (I do not have list of all states that do this but NY is one of them), if you lease the car, they charge you upfront on your total payments. That money is factored in to the capitalized cost, when you do buyout you have to pay those. For buyout taxes are calculated on buyout price, so you just paid taxes on depreciation + rent charge and at buyout paid tax on (remainder balance of car + previously paid taxes).

Clicked the wrong button. They are right next to each other. Fixed now.