Watch out for the "Monthly Lease Fee"

[Big]

I am confused. If you buyout the lease early, dont you have to give Kia all of your remaining 35 month payments (assuming you buy it out after 1 month)? So you pay that plus the residual? If so, how are you saving money? Sorry... I am confused...

I asked the my dealer here in Massachusetts about buying out the lease after the first payment, and he told me that the buyout price would be the sum of remaining 35 remaining payments + the residual. So the lease buyout didn't make any sense.

 

[Mach_Tuck]

I asked the my dealer here in Massachusetts about buying out the lease after the first payment, and he told me that the buyout price would be the sum of remaining 35 remaining payments + the residual. So the lease buyout didn't make any sense.

Correct. Remaining payments...not remaining fees (rent) due to the MF. UNLESS the lease was written that way. I'd hope no one would agree to any loan with what is essentially a pre payment penalty. Otherwise, your dealer is correct.

Just like a standard amortization. If you pay it off early, you don't make the interest payments on what Wouk have been the remaining payments in whole.

 

[MarkyMark]

Except that I think most states will recover that tax when registered therein. For example, I buy in OR and I pay very little tax as you state. However, when I go to register in AZ, AZ sees I paid little tax, because have to show bill of sale to register in state, and then they assess the remainder at the rate here. Total BS but no way to get around it here.

Unless, YOU want to purchase for me in OR, they I buy from you as a private party and then I am all good for register in AZ since the private sale is not taxable!!

EDIT: Chris beat me to this in post 13...

If I buy the car for you, there is a break-in period, in which I must really get the Stinger's kinks out for you. That usually only lasts about 5 years or so. ; )

 

[MarkyMark]

I asked the my dealer here in Massachusetts about buying out the lease after the first payment, and he told me that the buyout price would be the sum of remaining 35 remaining payments + the residual. So the lease buyout didn't make any sense.

NOT entirely true. The monthly fee has TWO components. Your Depreciation Amount over 36 months, AND the Rental Fee (interest over 36 months). If you buy it out all in a lump sum, say 35 months at once, you are NOT paying all the Rental Fee (AKA interest). Interest is amortized (loaded up front like a mortgage) and compounded daily per month. Thus, if you leased and purchased a day or two later, your Rental Fee/Interst will only be maybe $23. The rest is the Depreciation amount (Capital Cost – Residual).

Kia Financial cannot charge you interest paying on the principal of a loan. No bank or financial institution can do that. A car lease is a differently packaged loan, but that's what it is. You pay down the principal early, they can't charge intent on that.

That is where you can save thousands due to the Lease Cash. Kia Financial can't get that back.

 

[Chris]

Kia Financial cannot charge you interest paying on the principal of a loan. No bank or financial institution can do that. A car lease is a differently packaged loan, but that's what it is. You pay down the principal early, they c

This is not true. They can charge you whatever you agree to when you sign a contract. I'm not saying that your plan to pay off the lease early will work or not. I do not know one way or the other, but financial companies can front load the interest (look up the term Pre-computed interest) and they can also charge huge pre-payment penalties. None of that is illegal. If you sign the contract that's what you agreed to. I did try and get some info from the KMF web page but they were pretty sparse with what it said. The only thing I could find was a blurb that if you pay a lease off early you may need to pay a substantial penalty. From the KMF web page:

...Also, if you terminate your lease early, you may be subject to an early termination liability, which could be significant. Your Kia dealer may provide you with specific sale or lease details about the vehicle you are interested in...​

 

[Mach_Tuck]

Not sure if buyout would be considered terminated in this case as I have read that statement too and could argue both ways.

Details are, as Chris stated, in the signed contract. I posted earlier with regard to prepayment penalty. Ask questions and above all else KNOW WHAT YOU ARE SIGNING

 

[Bwebb]

I believe that clause is for ending the lease and returning the car to them. I would not think that termination refers to buying out early.

 

[Mach_Tuck]

I believe that clause is for ending the lease and returning the car to them. I would not think that termination refers to buying out early.

I tend to agree with this the more i read it. The buy out is basically the same as requesting a "pay off" on any loan. The lender would provide a pay off amount good for 10 or 15 days that includes all accumulated interest for that period.

 

[MarkyMark]

This is not true. They can charge you whatever you agree to when you sign a contract. I'm not saying that your plan to pay off the lease early will work or not. I do not know one way or the other, but financial companies can front load the interest (look up the term Pre-computed interest) and they can also charge huge pre-payment penalties. None of that is illegal. If you sign the contract that's what you agreed to. I did try and get some info from the KMF web page but they were pretty sparse with what it said. The only thing I could find was a blurb that if you pay a lease off early you may need to pay a substantial penalty. From the KMF web page:

...Also, if you terminate your lease early, you may be subject to an early termination liability, which could be significant. Your Kia dealer may provide you with specific sale or lease details about the vehicle you are interested in...​

Yes, they can charge a significant fee. So far, all I've seen is $500. That isn't significant compared to the savings. As always, know what you are signing and getting into. The monthly payments ARE amortized, and such, most of your early payments are just interest (like a mortgage) - I believe you called it front-loaded. This is why you would want to pay it off ASAP. And if the Kia Financial terms are not bad, there we go. Some leases penalize more towards the end, others the beginning.

 

[redgt]

Okay CA is N U T S!

View attachment 2941

Yes CA is nuts but all counties in the state will have different sales tax rate and even registration add on fees

my total registration on a gt2 was just over $300

the example given has a 9.5% sales tax and there are still some counties out there hanging on to state minimum 7.25%