Lease Buyout in Pennsylvania

[willbird287]

So I’ve done some research and can’t find an answer. Hoping someone in PA who has done this can shed some light.

We all know the popular lease buyout method to get a lower “purchase price”, but PA complicates this Because in addition to their state sales tax of 6%(plus 1% Allegheny or 2% Philadelphia county sales tax), they charge an additional 3% use tax on lease payments.

So now, if I do the early lease buyout, does anyone know if I will have to pay the 9%(or 10% or 11%) tax rate? My gut says since the buyout is more like a regular purchase and not a prepayment of lease payments plus residual that I’d only have to pay the 6%(or 7% or 8%) sales tax.

—Will

 

[willbird287]

I should also add that PA is a state where tax is charged on each lease payment and not up front. (In case anyone was reading this and curious)

But I’m hoping to get someone who’s done the lease buyout process in PA to chime in with what ended up happening with their buyout. So they’d already know this.

—Will

 

[twig2121]

I'll have to take a look at our payoff info - I performed this early buyout maneuver last year. Did you ask a dealer? I'm sure their finance person knows the answer...
I did post about the early lease payoff on the main lease buyout thread...specifically warning folks that may buy out of state but are PA residents. PA requires the lease to be closed in-person at a dealer whereas most states allow you to write a check to the kia finance company directly. This was a pain since we purchased in MD (only blue GT left within 100mi at the time) and apparently dealers don't make much money when you are just wanting to pay off the lease...several dealers refused to do the lease payoff for us since we didn't buy from them. One dealer actually charged a $500 premium. I finally found a "nice" dealer here in Lancaster whom processed our lease payoff avoiding us a trip back to MD.

 

[willbird287]

Oh damn that’s not what I wanted to hear. I’m going across the state to pick up my stinger. So it looks like I’ll be calling every dealer near me to find a nice one that won’t try to screw me to process it. Did you refinance your buy out or pay cash? I guess it’d be yet another step if KMF wont give you the buy out amount in advance of going to the dealer.

Ugh Pa....

—Will

I'll have to take a look at our payoff info - I performed this early buyout maneuver last year. Did you ask a dealer? I'm sure their finance person knows the answer...
I did post about the early lease payoff on the main lease buyout thread...specifically warning folks that may buy out of state but are PA residents. PA requires the lease to be closed in-person at a dealer whereas most states allow you to write a check to the kia finance company directly. This was a pain since we purchased in MD (only blue GT left within 100mi at the time) and apparently dealers don't make much money when you are just wanting to pay off the lease...several dealers refused to do the lease payoff for us since we didn't buy from them. One dealer actually charged a $500 premium. I finally found a "nice" dealer here in Lancaster whom processed our lease payoff avoiding us a trip back to MD.

 

[willbird287]

Just an update. I purchased a GT1 AWD in micro blue and am now in the waiting-for-KMF phase.

Once I have the account I guess I’ll have to start calling around to dealers in the Pittsburgh area to see who will process the buy out.

—Will

 

[willbird287]

So I ended up getting the KMF USA account info 2 days before the first months payment was due. So I’m one payment in - and now I’m trying to figure out how to get the lease bought out. The one dealer I called seemed to not want to bother with it and told me the finance guy was out for 2 weeks (so does that mean they can’t sell any cars during that time? Seems unlikely) and the other said I’ll have to get a inspection done at their shop to the tune of $200.

I made the appointment for the inspection but am on the fence whether I should call more dealers to see what the deal is. Anyone hear of this inspection before or is it a money grab?

—Will

 

[willbird287]

@twig2121. Any insight on this inspection requirement?

—Will

 

[Bmt134]

I just closed on a 2019 Stinger GT2 AWD last week and am also looking to do an early buyout. I read in a facebook group that he had to wait 4 months before he was able to buy it out from his PA dealer. Is that true of all Pennsylvania or is it just his dealer screwing him? What dealers have people in PA used to do their buyouts?

 

[willbird287]

So I’m finally finished with the process. I had to make two lease payments. The first at signing and the second at 1 month in. It took 6 weeks only because of the state not processing the registration fast enough otherwise I could have done it sooner.


The dealer I went to was good enough. The process took 3 hours and that majorly sucked but there were no snags that I had to fight the dealer on so that was better than most dealer experiences. A few things to keep in mind....


KMF says “go to the dealer you leased at”, which if this is an option for you might make the process smoother. Unfortunately....that wasn’t an option for me. Or at lest not a convenient one.


I purchased the vehicle outside Philly and bought out the lease outside Pittsburgh. I called two dealers before finding one that would do it for me. (One even told me the finance manager was out of town for two weeks and they couldn’t process it which seemed unlikely - what dealer can’t sell cars?) It seems likely that dealers don’t make money on these buy outs so the leasing dealer that already made money on the lease deal should be the one to do it. For me to have another dealer do the paperwork, fees are their only way to make it worth their time.


I was told that the process is involved...the leased vehicle is “bought” by the second dealer and “sold” back to me that same day.


Check your lease contract for a buy out fee. Mine was $0 so that’s good.


I needed all vehicle paperwork (insurance, license, registration, inspection) in hand before they would proceed with the buy out.


My dealer charged me $100 for a “lease buyout vehicle inspection” citing that the vehicle needed to be inspected prior to them selling any used vehicle to me (even though I had under 2,000 miles on the car).


Dealer Doc fees come in to play as with any used car sale but I was expecting them and the fees I was charged were not exorbitant nor were they they cheapest I’ve seen before.


Ultimately I paid less than the amount I asked local dealers for. Even after double fees, inspection, lease payments, etc. Their unwillingness to “deal” on this side of the state cost them a sale - and fun fact, the car I tried to buy months ago was still on this dealers lot when I signed out yesterday.


Hope this helps people in PA with their plans.


—Will

 

[87and66]

Out of curiosity, if you don't mind saying, which dealership did you go to? I am also leasing (today is actually my 1 year anniversary with the car. woo!) and I plan to keep the car long term. Not sure if I'll buy out early or wait until the lease period ends. But I again, I'm curious. I bought mine at South Hills Kia, so I probably wouldn't have any trouble there.

 

[willbird287]

Out of curiosity, if you don't mind saying, which dealership did you go to? I am also leasing (today is actually my 1 year anniversary with the car. woo!) and I plan to keep the car long term. Not sure if I'll buy out early or wait until the lease period ends. But I again, I'm curious. I bought mine at South Hills Kia, so I probably wouldn't have any trouble there.

South Hills is who said they couldn’t sell any cars for 2 weeks. I would highly suggest you stick with the same dealer to buy out the lease when it comes time.

I ended up doing my paperwork at Cochran in Robinson.

—Will

 

[Lazarus.Bird]

I know this thread is a bit older but thank you @willbird287 for the detailed info. I live in Pittsburgh and have been trying to hunt down the right GT2 to do a lease buyout with. I may have to go to Columbus to purchase if I can't get a local dealer to work out an appropriate price. Seems like that may cause me some headache but the lease cash offer is still worth the headache.

 

[willbird287]

I know this thread is a bit older but thank you @willbird287 for the detailed info. I live in Pittsburgh and have been trying to hunt down the right GT2 to do a lease buyout with. I may have to go to Columbus to purchase if I can't get a local dealer to work out an appropriate price. Seems like that may cause me some headache but the lease cash offer is still worth the headache.

You’re welcome! Glad to help. I know laws vary from state to state so specifics can help a lot. After a year with the car and only 4,000 miles it’s been good to me. Good luck with your transfer from Ohio. Shouldn’t be too difficult or at least impossible. People move so it has to be able to be done.
—Will

 

[Lazarus.Bird]

That's kind of funny you had difficulty with South Hills Kia. We bought a Telluride from them last year and it went ok, had a couple of issues. I thought for sure they'd want to help me buy a Stinger but they've been somewhat difficult to deal with.

 

[OhioStateStinger]

Any particular reason why you didn't look at a credit union to finance instead of going back to the dealer? My initial thought would be that you would get a better rate and not have it eat in to your rebate savings?

 

[twig2121]

@twig2121. Any insight on this inspection requirement?

—Will

Sorry for the delay - I did have to get the car inspected in PA soon after buying from MD - so there's an added cost there. Overall, I saved money, but there was some hassle involved - chief of which for me was finding a local dealer willing to perform the buyout process without charging their own fees.

To a point above, I think you only need to make the first month's payment. Some companies like to tell you it's necessary to make certain # of payments before buyout, but that appears to be just something that benefits the dealer itself so I've bought out after the first month or two since I know I'm keeping the cars for a long period.

 

[Lazarus.Bird]

South Hills is who said they couldn’t sell any cars for 2 weeks. I would highly suggest you stick with the same dealer to buy out the lease when it comes time.

I ended up doing my paperwork at Cochran in Robinson.

—Will

So I ended up buying from Jim Shorkey Kia (had exactly what I wanted and were more willing to negotiate) and I just got my PA DMV registration in the mail so working on doing the early lease buyout.

I called South Hills Kia and I got transferred like 3 times and was told a couple of times I'd have to call back when the "guy" who handles those is in the office. Even had the GM aggressively ask me why I didn't just go to the dealership I bought it from and that they had to reserve time for paying customers who buy cars from them. I ripped into him a bit saying I bought a fully loaded Telluride from them a year ago and use their service department and all of the sudden it was easy to book an appt for next Tuesday. What a joke. I'd go somewhere else if it wasn't so convenient for me. Service has been pretty solid there so far, but I'm definitely not buying another car from them again.

 

[Yeti]

What should I expect? I am leasing a 2019 gts awd. Lease is ending later this year. Paper work from initial lease says residual value at end is $25,290. Also says purchase fee is $0 at end. car has about 5000 miles. Other than the PA sales tax of 6% and the $25k, what other fees should I expect? Am I wrong thinking it would be stupid to let the car go when I see the same car listed for the high $30’s to low $40’s

 

[G-926878]

What should I expect? I am leasing a 2019 gts awd. Lease is ending later this year. Paper work from initial lease says residual value at end is $25,290. Also says purchase fee is $0 at end. car has about 5000 miles. Other than the PA sales tax of 6% and the $25k, what other fees should I expect? Am I wrong thinking it would be stupid to let the car go when I see the same car listed for the high $30’s to low $40’s

What ended up happening with this? I have a 2019 Sorrento which the lease is up early April. I leased from Jim Shorkey in Wexford. I called Hyundai/Kia finance today to discuss and she basically said "good luck" because you are in PA and you have to go to a dealership to buy it out. I don't mind this, but she also said the dealership can try to force you to pay more than what the original contract states. I find this hard to believe but I am also not certain. I have about 12,000 miles on a it with 6 weeks left on the lease which is why I'm buying it out.

 

[Yeti]

I dealt with Smail Kia as they were the ones I leased the stinger from. They offered me $12000 cash and a ride home if I turned the car in. i told them no, I wanted to buy it out and the lease contract stated there was a $0 dollar purchase fee. I paid the $25k residual, plus 6% sales tax on the residual. They charged me an additional $75 or so. this was a state fee to change the title from Kia finance to my name and that was it. They waived all other fees. It was actually the best car dealership experience I have ever had. They may offer you cash to turn it in even if you are over the mileage allowance