Lease then Buyout - Contract Explanation

[Mach_Tuck]

As a reference. My Yellow GT2 RWD was approx $41k before tax and title and fees.

 

[bugaboo90]

Ya I would pay cash for the buyout. I am just trying to figure out how much my hard earn money I am saving by doing this lease and buy out. If I simplify my numbers to show my out of pocket costs here’s what I have.

For lease
I did a trade in and put a little extra down. So, I am out $8100 as down payment. I am making 461 in monthly payments. So if I see the lease to it’s conclusion, I will have paid 16600. Then if I buy it, the residual is 26725 and tax on that is 1875. So, in around numbers, I will have paid out of my pocket 8100+16600+26725+1875 =53300.

For buyout
I am still out 8100 for down payment . I have made 3 lease payments of 461 which is 1383. My buyout is 40300.
So for a buyout I will have paid a total of 8100+1383+40300 =49783

So, the saving via buyout is 53300 - 49783 = 3517.

Does this seem right? Again, I apologize to the lease experts, but I am just trying to keep thing simple by understand how much lighter my pocket will be in both instances.

FYI my Negotiated price for the car was 49800, if that matters.

Thank you and please be patient with me. Thank you.

You will pay tax on residual as well as potential finance charge for the same. Unless have cash. You already took advantage of the lease rebate. You ARE currently giving this back to KMF in the form of the RENT line on the lease agreement. A buyout mitigates paying this RENT and this provides your savings. The longer you make lease payments the more rent you pay back and the less benefit the buyout has.

 

[NYLAWBIZ]

Buyout means buyout at the commencement of the lease (first month or two). The longer you wait to to the buy out, the more rent you pay and the less you benefit from the lease/buyout maneuver.

 

[JVsGT]

Ya I would pay cash for the buyout. I am just trying to figure out how much my hard earn money I am saving by doing this lease and buy out. If I simplify my numbers to show my out of pocket costs here’s what I have.

For lease
I did a trade in and put a little extra down. So, I am out $8100 as down payment. I am making 461 in monthly payments. So if I see the lease to it’s conclusion, I will have paid 16600. Then if I buy it, the residual is 26725 and tax on that is 1875. So, in around numbers, I will have paid out of my pocket 8100+16600+26725+1875 =53300.

For buyout
I am still out 8100 for down payment . I have made 3 lease payments of 461 which is 1383. My buyout is 40300.
So for a buyout I will have paid a total of 8100+1383+40300 =49783

So, the saving via buyout is 53300 - 49783 = 3517.

Does this seem right? Again, I apologize to the lease experts, but I am just trying to keep thing simple by understand how much lighter my pocket will be in both instances.

FYI my Negotiated price for the car was 49800, if that matters.

Thank you and please be patient with me. Thank you.

I believe you still have to pay tax on the the buyout amount. Don't forget to add that in. That is one of the reasons I'm choosing not to buyout my lease at this point. My buyout is $41,425 so I'd have to pay tax on that amount ($2589) if I choose to go that route. If I wait till lease end to buyout, I only pay tax on the residual ($26,052) which is $1628. After my calculations (including adding finance charges on the residual) my savings on buyout would only equate to $1539. I figured, I'd gladly forfeit that savings to see what the market value is on this car in 3 years. Also, who knows what options/improvements will occur over the next 36 months for the Stinger. I weighed pros vs. cons and came to the decision of seeing my lease to maturity. My initial goal walking into the dealership was to purchase outright. Once the lease cash was introduced, I decided I couldn't leave that on the table so I went with the lease with intent to buyout immediately. Once I put the numbers side by side, I think I'll wait the lease out. I might change my mind over the next couple of years depending on what the market dictates. Either way, still better than purchasing outright and forgo the lease cash.

 

[STNGRNV]

I believe you still have to pay tax on the the buyout amount. Don't forget to add that in. That is one of the reasons I'm choosing not to buyout my lease at this point. My buyout is $41,425 so I'd have to pay tax on that amount ($2589) if I choose to go that route. If I wait till lease end to buyout, I only pay tax on the residual ($26,052) which is $1628. After my calculations (including adding finance charges on the residual) my savings on buyout would only equate to $1539. I figured, I'd gladly forfeit that savings to see what the market value is on this car in 3 years. Also, who knows what options/improvements will occur over the next 36 months for the Stinger. I weighed pros vs. cons and came to the decision of seeing my lease to maturity. My initial goal walking into the dealership was to purchase outright. Once the lease cash was introduced, I decided I couldn't leave that on the table so I went with the lease with intent to buyout immediately. Once I put the numbers side by side, I think I'll wait the lease out. I might change my mind over the next couple of years depending on what the market dictates. Either way, still better than purchasing outright and forgo the lease cash.

Would it still be the case even with the lease tax you have to pay every month of the lease though? That eats into anything you think you're saving by completing the lease.

 

[JVsGT]

Would it still be the case even with the lease tax you have to pay every month of the lease though? That eats into anything you think you're saving by completing the lease.

Seeing remaining lease thru maturity and then buyout :
Payment $586.36 X 34 = $19,936.24
Residual = $26,052
Residual finance charge @ 2.74 APR for 48 months = $1483
Tax on Residual = $1628.25
TOTAL = $49,099.49

Lease Buyout after 2 payments :
Buyout amount = $41,425.67
Tax on Buyout = $2589.10
Buyout finance charge @ 2.74 APR for 72 months = $3545
TOTAL = $47,560

Savings Lease Buyout vs. Buyout at Lease maturity = $1539

 

[STNGRNV]

Seeing remaining lease thru maturity and then buyout :
Payment $586.36 X 34 = $19,936.24
Residual = $26,052
Residual finance charge @ 2.74 APR for 48 months = $1483
Tax on Residual = $1628.25
TOTAL = $49,099.49

Lease Buyout after 2 payments :
Buyout amount = $41,425.67
Tax on Buyout = $2589.10
Buyout finance charge @ 2.74 APR for 72 months = $3545
TOTAL = $47,560

Savings Lease Buyout vs. Buyout at Lease maturity = $1539

72 months? Yikes.

 

[JVsGT]

72 months? Yikes.

You can pick whatever term you like. Personally, I'd prefer a $625 payment over $735. You can always pay it off sooner and save interest.

 

[joe7987]

[Nevermind, just found the answer to my question, but cannot delete this.]

 

[Joeh1974]

Negotiating with a dealer, and explained that I'm interested in doing immediate lease payout. Their response:

"You are correct that taking lease cash upfront can save you a lot of money, but please don't count on buying out the lease early in hopes of saving that money because Kia Motor Finance will consider the lease cash back into the lease buyout. If you decide to lease, I would recommend making your payments in full throughout the term of the lease."

Is the finance manager incorrect, or did something change?

 

[MarkyMark]

Negotiating with a dealer, and explained that I'm interested in doing immediate lease payout. Their response:

"You are correct that taking lease cash upfront can save you a lot of money, but please don't count on buying out the lease early in hopes of saving that money because Kia Motor Finance will consider the lease cash back into the lease buyout. If you decide to lease, I would recommend making your payments in full throughout the term of the lease."

Is the finance manager incorrect, or did something change?

No nothing changed. Dealers continue to lie. Any other questions?....

 

[Joeh1974]

No nothing changed. Dealers continue to lie. Any other questions?....

Two dealers competing with each other. I live in NM, and the dealers I'm negotiating with are based in AZ. The dealer who is currently giving me a better deal is telling me that I need to pay the AZ GRT (7.8%) and then go back to the NM DMZ to get a refund of the 4.8% (NM GRT is only 3%). My last vehicle was purchased in TX, and that dealership only charged me the NM GRT. Is this just the AZ dealership being stubborn?

Also, anyone know if NM is a double taxation state?

 

[NYLAWBIZ]

Two dealers competing with each other. I live in NM, and the dealers I'm negotiating with are based in AZ. The dealer who is currently giving me a better deal is telling me that I need to pay the AZ GRT (7.8%) and then go back to the NM DMZ to get a refund of the 4.8% (NM GRT is only 3%). My last vehicle was purchased in TX, and that dealership only charged me the NM GRT. Is this just the AZ dealership being stubborn?

Also, anyone know if NM is a double taxation state?

Unless you have a tax lawyer on retainer, trying call your state taxing authority or search their website. You probably can find the answer there, every state taxes their own way.

 

[Fl stingergt]

Just buy the car the things are great. It’s a car even when you think your getting a good deal your getting boned. Start engine to leave you lose 5 grand and another when you leave parking lot

 

[Joeh1974]

Just buy the car the things are great. It’s a car even when you think your getting a good deal your getting boned. Start engine to leave you lose 5 grand and another when you leave parking lot

Depreciation doesn't usually bother me too much as we keep our cars for around 10 years or so. Unfortunately, I'm just the kind of person where paying more than I need to will gnaw at me for a very long time. Plus I really like to try and negotiate for everything I can.

I will admit, the test drive sucked me in though!

NYLAW - Thanks. I'll try to research the local website, just seeing if anyone from NM had knowledge already.

 

[Fl stingergt]

Ya I probably got boned real good I was one of first 500 to own car in us. So they probably bent me over. They make you think you get good deal but it was so new they had most of the control and they new it. I waited 5 years for car. Wanted it says the first drawing I saw of it. Even if it is a lot different from original

 

[NYLAWBIZ]

Ya I probably got boned real good I was one of first 500 to own car in us. So they probably bent me over. They make you think you get good deal but it was so new they had most of the control and they new it. I waited 5 years for car. Wanted it says the first drawing I saw of it. Even if it is a lot different from original

Well, you paid for the privilege of being one of the first 500 to enjoy the car. Luxury has its price

 

[Fl stingergt]

Ya and I love my second wife. The blue mistress.

 

[MarkyMark]

Just buy the car the things are great. It’s a car even when you think your getting a good deal your getting boned. Start engine to leave you lose 5 grand and another when you leave parking lot

IMHO it's always easy to spend other people's money... And spending money NOT on the car, but some state tax and spend grab makes it even less "fun" to do. I suppose some people have a lot of money to blow. Thats great, no problem with anyone who wants to do so.

Just buy the car the things are great. It’s a car even when you think your getting a good deal your getting boned. Start engine to leave you lose 5 grand and another when you leave parking lot

IMHO, I never encourage people just to "spend money" when they need not do so. Especially if the selling party is trying to be unethical - I would say never reward such behavior. So I think it's a good idea for Joeh1974 to figure out how this works. At the least, he'll know exactly what he is - or is not - paying for. Personally, I wouldn't make a $40k - $50k decision unless I know what it's going for. And paying extra taxes or shoving more money into a dealer's hands for being less than honest, isn't my idea of a good time.

NOTE: I'm also very much a Dave Ramsey, zero debt guy/family. We don't make a lot, but we have more than people that make double what I do, and there is a reason for that. "It's now how much you make, it's what you do with what you have."

That's my take today! Thanks guys. And good luck on the Stinger - I think we can all agree - GREAT car!

 

[Joseph Spiegel]

I did the Costco deal combined with the lease rebate and figured an approximate combined savings of $8k off sticker for my GT2. I’m estimating because it’s a moving target and the $300 fee, some say yes some no so it’s fluid. I’m happy. The dealer asked me to make three payments as less than that they take it in the shorts from Kia. Made sense to me they were pretty damn straight with me so no worries. I was ready to write a check and this was one helluva bonus I learned about here. My MSRP was 50,150. I got the net.