Urgent help needed - do I understand buyout process?

[Mike P]

Hello all,

I worked up a deal and before I go in and sign I want to make sure I understand what my bottom dollar is going to be (so I know I can afford it!)
2019 GT2 - sale price 49700 - 707 monthly payment with 707 due at signing plus 189.5 doc fee. So buyout would be (49700 - 10200 - 707)*sales tax (7%) + 300 buyout fee + title etc ?? All said and done my numbers come out to 43000 ish. Does this jive with others’ experience?? Or am I missing something critical??
I’m going to be doing the buyout through a CU.

 

[Mike P]

Hello all,

I worked up a deal and before I go in and sign I want to make sure I understand what my bottom dollar is going to be (so I know I can afford it!)
2019 GT2 - sale price 49700 - 707 monthly payment with 707 due at signing plus 189.5 doc fee. So buyout would be (49700 - 10200 - 707)*sales tax (7%) + 300 buyout fee + title etc ?? All said and done my numbers come out to 43000 ish. Does this jive with others’ experience?? Or am I missing something critical??
I’m going to be doing the buyout through a CU.

So now dealer is saying they estimate the buyout price will be around 41200. I assumed the buyout price would be based on the 39500 figure (49700-10200). Anybody know what I am not accounting for?

 

[Rob M]

I don't see the lease acquisition fee of $650 listed in your calculations. That needs to be considered somewhere. Is the $707 due at signing your first payment? Part of that first payment is rent charge so you wouldn't be knocking the full $707 off of what you owe. Since you don't identify in which state you reside, it is difficult to get a full understanding of the state's treatment of the transaction. For example, you are calculating sales tax after the lease incentive. Is that correct for your state? Some states charge tax on the sales price before any manufacturer to dealer incentives are considered, which would be another $700 in taxes. If so, that might explain most of the difference.

 

[Mike P]

I don't see the lease acquisition fee of $650 listed in your calculations. That needs to be considered somewhere. Is the $707 due at signing your first payment? Part of that first payment is rent charge so you wouldn't be knocking the full $707 off of what you owe. Since you don't identify in which state you reside, it is difficult to get a full understanding of the state's treatment of the transaction. For example, you are calculating sales tax after the lease incentive. Is that correct for your state? Some states charge tax on the sales price before any manufacturer to dealer incentives are considered, which would be another $700 in taxes. If so, that might explain most of the difference.

I am in IN. How do I find out how my state handles this?

 

[Rob M]

Normally, you would just go to your states DMV website, in your case BMV at in.gov. However, the information is not easy to find on the site. I was able to find the following on a non-gov website (sales tax dot com):

"Indiana taxes vehicle purchases before rebates or incentives are applied to the price..."

So for the proper tax amount it looks like you need to add back in the $10,200 for the sales tax calculation, so at 7% that's $714 tax plus the $650 lease acquisition fee you would need to add into your buyout price, plus the rent fee on the first payment. That's a total of at least $1,400 which takes your $39,500 estimate up to at least $40,900, i.e., the dealer's estimate is looking pretty accurate.

I don't know whether Indiana allows the lessee to complete the buyout through KMF, or whether you need to return to an Indiana dealership to do so (at an additional cost in addition to the $300 buyout fee). Maybe someone from IN who has completed a buyout can chime in on that issue.

 

[Mike P]

Normally, you would just go to your states DMV website, in your case BMV at in.gov. However, the information is not easy to find on the site. I was able to find the following on a non-gov website (sales tax dot com):

"Indiana taxes vehicle purchases before rebates or incentives are applied to the price..."

So for the proper tax amount it looks like you need to add back in the $10,200 for the sales tax calculation, so at 7% that's $714 tax plus the $650 lease acquisition fee you would need to add into your buyout price, plus the rent fee on the first payment. That's a total of at least $1,400 which takes your $39,500 estimate up to at least $40,900, i.e., the dealer's estimate is looking pretty accurate.

Right on thank you. I love this forum!

 

[Todd Piefer]

Hello all,

I worked up a deal and before I go in and sign I want to make sure I understand what my bottom dollar is going to be (so I know I can afford it!)
2019 GT2 - sale price 49700 - 707 monthly payment with 707 due at signing plus 189.5 doc fee. So buyout would be (49700 - 10200 - 707)*sales tax (7%) + 300 buyout fee + title etc ?? All said and done my numbers come out to 43000 ish. Does this jive with others’ experience?? Or am I missing something critical??
I’m going to be doing the buyout through a CU.

Curious to know what are your terms with the credit union?

 

[Mike P]

Curious to know what are your terms with the credit union?

48 mo loan at 3.69%