Lease then Buyout - Contract Explanation

[OKIEBoy]

I've seen at least a couple posts in this forum and others that suggest that TX "double taxes" lease buyouts. I was actually convinced that was indeed fact and may of even posted a similar comment. However, TX Administrative Code, Title 34, Part 1, Chapter3, Subchapter F, Rule 3.70 Motor Vehicle Leases and Sales, subsection (C) states the following:

"If the transaction is considered to be a sale and not a lease, as described in subsection (b) of this section, no additional motor vehicle sales tax is due at the time the initial lessee/purchaser takes title to the vehicle, provided the correct amount of tax was previously paid on the total consideration. If the correct amount of tax was not paid on the total consideration, the lessee/purchaser must pay the difference when the vehicle is titled in his name."

I live and MD and the TX law appears to be similar where if the initial lessee buys the vehicle, additional taxes are waived even though there is technically a change in ownership from the lessor to the buyer.

In OK I had choice of lease or balloon. Either way, there is no new sales tax if car is purchased from Kia. You have to check each states tax law on this. If I had to pay sales tax (again), since leasing uses exact same tax-then I would never buy a leased vehicle.

 

[Todsulli06]

I'm looking at an 2018 GT2 AWD. The dealership price is $41,114. I test drove it and asked for the lease break down for 2 years 12,000k miles zero down. I'm going to buy it out in a month.

Market value: $52, 920
Dealer Discount $2,706
Vehicle selling point: 50,214
Processing Fee: $895
License/Title: $144
Freight: $995
Acq Fee: $650
Tax Collected: $1,827.67
Capitalized Int Fees: $753.53
Total Cap: $55,479.20
Rebate Savings: $9,100
Net Cap: $46,379.20

36 months: 753.53
Rate: .00238
Miles: 12,000
Residual 48%
Residual amount:$25,401.60

What do you think of this initial offer? Should I try to get a bigger dealer discount or how should I try to get a better deal.

Thanks,

Todd

 

[h1pst3r88]

I got 5900 in dealer discount and 9500 in rebate from Michael Kia in Groton CT. Actually 9900 in rebates because I am a veteran.

This was on a 2018 GT2. Tell them you have that offer from another dealer and watch magic happen. Even better call Brian at Micael Kia... he was great to work with, even though I bought a BMW.

 

[OKIEBoy]

I'm looking at an 2018 GT2 AWD. The dealership price is $41,114. I test drove it and asked for the lease break down for 2 years 12,000k miles zero down. I'm going to buy it out in a month.

Market value: $52, 920
Dealer Discount $2,706
Vehicle selling point: 50,214
Processing Fee: $895
License/Title: $144
Freight: $995
Acq Fee: $650
Tax Collected: $1,827.67
Capitalized Int Fees: $753.53
Total Cap: $55,479.20
Rebate Savings: $9,100
Net Cap: $46,379.20

36 months: 753.53
Rate: .00238
Miles: 12,000
Residual 48%
Residual amount:$25,401.60

What do you think of this initial offer? Should I try to get a bigger dealer discount or how should I try to get a better deal.

Thanks,

Todd

You show the 36 month. Regardless, the dealer discount looks a little lite on a 2018. Offer $6k off can be firm about it. you can always pay more later if you need to.

 

[OKIEBoy]

OkieBoy, thanks so much for the detailed info! What was the original sticker price so I know the discounts they extended you. You got such a great deal! If I could find that... even on a GT1 I would do it!

Enjoy the Stinger!!!

MSRP was right at $50,500 (trunk mat, floor mats, net, +$250 more for window tint)

 

[Rob M]

You show the 36 month. Regardless, the dealer discount looks a little lite on a 2018. Offer $6k off can be firm about it. you can always pay more later if you need to.

I agree with OKIEBoy. I leased in September 2018 and didn't get the best deal compared to some, but significantly better than what this dealer is offering you for a vehicle that is the previous year's model. The "vehicle selling point" is several thousand $ more than the car should cost at this time, IMO, before all that juicy lease cash is considered. The dealer's discount is also misleading because the "processing fee" of $895 is simply there to pad the dealer's profit. Plus, the dealer is adding their own "freight" charge of $995 though Kia has included cost of freight on the Mulroney Label. $2706 - $895 - $995 = $846 (the more accurate dealer discount). Some dealers will insist that they have to charge those fees (mine did), so you just need to negotiate that "dealer discount" amount up to $6K or more without increasing any other part of the transaction to get into the realm of respectable deal.

 

[MerlintheMad]

The dealership price is $41,114

I'm not seeing that in the figures as you presented them. How do you get that "price"?

Should I try to get a bigger dealer discount

Oh heck yes. I got $2,995 LAST March. Buyers on here have gotten twice what I got, months ago. There is no way a dealer should now be offering less than 10% OFF MSRP for a MY18.

 

[Rob M]

I'm not seeing that in the figures as you presented them. How do you get that "price"?

It's the "vehicle selling point" minus the $9,100 in rebates. $50214 - $9100 = $41114. Before all the TTL fees and dealer fees are added in to get to the capitilized cost.

 

[MerlintheMad]

It's the "vehicle selling point" minus the $9,100 in rebates. $50214 - $9100 = $41114. Before all the TTL fees and dealer fees are added in to get to the capitilized cost.

Oh. Thanks. I knew that the answer would make me look dense. I am where numbers are concerned: which is why this lease then buyout thing has been such a learning curve.

 

[GenesisG70]

I'm looking at an 2018 GT2 AWD. The dealership price is $41,114. I test drove it and asked for the lease break down for 2 years 12,000k miles zero down. I'm going to buy it out in a month.

Market value: $52, 920
Dealer Discount $2,706
Vehicle selling point: 50,214
Processing Fee: $895
License/Title: $144
Freight: $995
Acq Fee: $650
Tax Collected: $1,827.67
Capitalized Int Fees: $753.53
Total Cap: $55,479.20
Rebate Savings: $9,100
Net Cap: $46,379.20

36 months: 753.53
Rate: .00238
Miles: 12,000
Residual 48%
Residual amount:$25,401.60

What do you think of this initial offer? Should I try to get a bigger dealer discount or how should I try to get a better deal.

Thanks,

Todd

Got a better deal on a 2019 GT2 so not a good deal.

 

[paikche]

Hey guys,

Posted this on another forum but this one seems more active!
Just recently leased a 2018 GT2 with plans on doing a lease buyout.
It's been 1 month since I signed the paperwork yet my online account is not set up yet.
I called the finance person at my dealership and they mentioned that there is a backlog on KIA thus my paperwork is in line to get processed.
They asked that I pay the first lease monthly payment via phone.
Is this a normal occurrence with Kia? Never had this issue before in my other car purchases/leases.
Any input is greatly appreciated! Much thanks in advance!

 

[MerlintheMad]

Hi, @paikche. The asserted backlog is either dealer/sales playing games, or the natural result of the word getting out. It could take longer for your buyout than it did a few months ago. When you say your Kia account isn't online yet, does that mean you did everything to create it? Or some delay at Kia's end is preventing your account from being active?

 

[Todsulli06]

Got a better deal on a 2019 GT2 so not a good deal.

Can you post your 2019 GT2 deal so I can compare

 

[Todsulli06]

I was able to get the dealership discount to $6,000 and 24 month kia incentive is now up to $10,100 even though they wrote $10,500.

Lease Alternatives
Market Value 52,920.00
Discount Savings -6,000.00
Vehicle Selling Price 46,920.00
Processing Fee 895.00
License / Title 144.00
Freight/Handling Fee 995.00
Acquisition Fee 650.00
Tax on Collected Items 1,628.18
Capitalized Initial Fees 710.97
Total Cap 51,943.15
Rebate Savings -10,500.00
Net Cap 41,443.15
24 Month Payment 710.97
1st Payment 710.97
Due On Delivery 0.00
Rate 0.00220
Annual Miles 12,000
Residual % [52,920] 51+2=53%
Residual Amount 28,047.60
Tax: VA 4.25% 4.25 %

 

[MerlintheMad]

That's another $4,300 savings ($4,700 if the rebate is bigger). Not a killer deal but alright, it seems to me.

 

[Stevizzle]

Hey guys,

Posted this on another forum but this one seems more active!
Just recently leased a 2018 GT2 with plans on doing a lease buyout.
It's been 1 month since I signed the paperwork yet my online account is not set up yet.
I called the finance person at my dealership and they mentioned that there is a backlog on KIA thus my paperwork is in line to get processed.
They asked that I pay the first lease monthly payment via phone.
Is this a normal occurrence with Kia? Never had this issue before in my other car purchases/leases.
Any input is greatly appreciated! Much thanks in advance!

I leased mine last Monday and got the email from KIA today and setup my account so I would say it's on the dealerships end.

 

[paikche]

Hi, @paikche. The asserted backlog is either dealer/sales playing games, or the natural result of the word getting out. It could take longer for your buyout than it did a few months ago. When you say your Kia account isn't online yet, does that mean you did everything to create it? Or some delay at Kia's end is preventing your account from being active?

I leased mine last Monday and got the email from KIA today and setup my account so I would say it's on the dealerships end.

Hey guys, thanks for the replies. I actually called KMF when the VIN# still wasn't registered after three weeks and KMF mentioned that they did not have any paperwork on my car. Told me to reach out to the dealership. When I called the finance, they mentioned there was a backlog... Maybe I'm worried about nothing but I was hoping to save a bit more by buying out the lease before the second payment. Just curious what other people's experience was (seems like most got account set up within a week or two!). Hopefully, the dealership is being honest but who knows haha... Thanks again!

 

[MerlintheMad]

Told me to reach out to the dealership. When I called the finance, they mentioned there was a backlog...

There it is: the dealer is the problem. Kia Corp has to deal with this crap. Their hands are tied; the dealers are the only "hands" they have. Kia is upping their game, but this takes time and enormous effort and expense; we have no idea.

I hope that you get to buyout in the next couple of months. But just know that as soon as it does happen, you are spared any further monthly rent charge; and that savings by lease-end is really the biggie: I saved over $5,200 by doing the buyout.

(But this is very confusing stuff: my wife just heard me explain what I was doing - I was looking at the lease to get the total rent charge figure again, because numbers don't stay in my head - and she said, "No, that was the cost of getting the lease." And I said, "We avoided most of it by doing the buyout early; are you saying they just kept the whole rent charge?" And she seemed to believe it. But, going back over this thread, I am 99.99% certain that she's mistaken.)

 

[Puckhead]

Hey guys, thanks for the replies. I actually called KMF when the VIN# still wasn't registered after three weeks and KMF mentioned that they did not have any paperwork on my car. Told me to reach out to the dealership. When I called the finance, they mentioned there was a backlog... Maybe I'm worried about nothing but I was hoping to save a bit more by buying out the lease before the second payment. Just curious what other people's experience was (seems like most got account set up within a week or two!). Hopefully, the dealership is being honest but who knows haha... Thanks again!

My KMF account took about 3 weeks to set up. This was back in January. I sent a payoff check and the odo statement within 2 days after the set up and prior to my second lease payment. Like you, I also wanted to avoid the second lease payment. All was good after confirming with KMF that they got my payoff. I just received my Title yesterday.

 

[pantheman75]

Help somebody with a small brain understand this... am I correct in thinking that unless one has the cash on hand to immediately fully buyout the car using the lease / buyout discount "trick" it would be dumb to finance the buyout immediately rather than pay the lower monthly lease payment, save the "extra" cash, NOT pay interest on borrowed money (because there isn't any), and then use the saved cash to put down on the buyout and THEN finance the remaining lower balance when the lease is up?