2023 Kia Niro EV

Ask the Hackrs Buy/Finance
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1

Hello all,
I’m new here and I need a sanity check. I believe I somewhat understand what is going on here. Illinois, lake county

MSRP: 42,410
Term: 3 year, 10k mile
Selling Price: 36,510
Aftermarkets: 799
Doc Fee: 358
Acquisition fee: 650
Cap fees: 400
Cap taxes: 1,327.46
Gross Cap cost: 38,717.03
Cash reduction: 4,000 - Guessing that is my down payment
Customer Cash: 4,000 - This is what they are saying the dealer is taking off.
Rebates reduction: 5,000 - This is from kia
total cap reduction 9,000.
Net cap cost: 31,044.49 - This is what they are telling me is the actual sale price.

Residual: .68 for 28,838.80

Term totals
Depreciation: 2,205.69
Rent/Lease Charge: 7,545.24
Total of payments $9,750.96

Payment:
Rate: .0035. I know this equates to about an 8.5% rate. they haven’t run my credit but it should be better than that.
Monthly: 270.86
Disposition: 400,
Purchase option fee: 300
Initial payment 9270.86 - 5k from rebate, 4+ first month from me.

The numbers don’t match when I put in the calculator

From what I understand, the money they take off, the 4k shouldn’t be taxed. That is just a reduction in the price. They say the 5k rebate from Kia is, so that’s how I entered it in. I also don’t see the 7500 EV tax credit anywhere in here. I brought that up to them and they insist that there is no tax credit lease loophole. It’s even on Kia’s site as a promotion. Entered in, it seems like my payment even at that inflated money factor would be much lower.

So correct me if I’m wrong, but this seems like a bad deal, or at least not what I could be getting. For background, this is a 2023 Niro EV wind that has been sitting on their lot for a year. What I would expect is that they would be taking money off, passing through the tax credit, and a rebate from Kia. Obviously, they don’t have to do that just like I don’t have to sign on the dotted line. What it seems like is either they have no idea that there is a tax credit they could be claiming on a lease, in which case it should be no problem to have them add it on (and probably increase mileage/lower residual) or, they know about it, are getting their back end rebate from kia, pocketing 3500 from the tax credit, whatever their dealer holdbacks are, and then juicing with crappy aftermarket stuff. Basically trying to sell aging inventory for above msrp.

Let me know if i’m missing something here. I’m admittedly a newbie to leasing.

2

There’s no federal tax credit applied to the lease. Whatever rebate is provided by the bank is it. That number could even be zero

3

you sure about that?

4

Yes, did you read this part?

  • There’s also a catch: The tax credit belongs to the lessor, not to you, the lessee.
5

Yes, if you read my post you will find that I quite clearly explained that they would need to pass that through to me. They don’t have to but I also don’t need to buy the car. You said it doesn’t exist but it clearly does.

I go on to show that they are either ignorant of the tax credit or they are attempting to pocket most of it and with the contribution from kia, are actually still effectively selling a car that has been sitting on their lot for over msrp.

6

Who is “they”? The dealer? There was no federal tax credit that went to the dealer and therefore there is nothing for them to pass on even if they want to.

If the article you cite interchangeably uses “dealer” and “lessor” then that’s just incorrect and frankly very poorly researched writing.

The only rebate that exists on a lease is what the lessor decides to pass through. If it’s $5,000 on the Niro then that’s all there is. If you’re assuming there’s an additional $7,500 on top of the lessor rebate then you are incorrect.

7

I think you may be a bit uneducated on this topic.

https://www.sapling.com/12130320/lessor-vs-lessee-vehicle

The lessor is the one that leases the vehicle. In this case, the dealership owns the vehicle. the problem is this is semantics. Whoever you want to define as the lessor, the dealership or Kia, they are receiving the EV tax credit if the vehicle is leased. This is common knowledge.

You also seem to be trying to argue that it doesn’t exist to give. It exists and they can choose to pass it through or not, just like i can choose to buy the car or not. So however you are defining lessor, they do get a clean vehicle tax credit.

So we have 3 different categories of discount on this vehicle… again, i know they don’t have to give me any of them. It’s almost like you are being intentionally obtuse or got caught making a mistake.

1: the dealership discount. This is what they are willing to take out of their own pockets to get the deal done.
2: Kia discount: the money Kia would be willing to give to get a deal done. If you think this doesn’t exist on a closeout model, then I have no idea what to tell you except that I feel I can confidently ignore you.
3: The EV tax credit. - This is from the government and is given to the lessor. Again, I know they don’t have to give this to me… except it is on their website… andy Hyundais, and every other manufacturer trying to be competitive with those that can just claim it regularly at the point of sale because they qualify.

I don’t get what is so hard to grasp. If the dealership claims this tax credit (because why would you not) and then tries to only give me 4k off, this means they are effectively pocketing $3500. Again, they’re prerogative but there is no way I’m signing on that dotted line if they are doing this. If Kia is the one claiming the credit because they become the leasing company, and they are offering $5k, it means they are pocketing $2500 from the government.
If you add all that together, between all parties, they are offering a 9k total cap reduction. With the tax credit existing(again, I don’t care who is claiming it, Kia or the dealer), they are effectively offering a $1500 rebate on a 2023 that has been on the lot for a year. Their choice, but it’s also a choice to not buy the vehicle.

Why exactly do you persist with the idea that the tax credit doesn’t exist? For the weird reason that the lessor gets to claim it. I know it isn’t on this deal but it really should be. Maybe you don’t agree, in which case I would ask why. Do you think that a vehicle sitting on the lot should cost the same as a brand-new 2024 that just arrived? It’s an odd position to take since Kia is offering 5k on the 2024s right now on cash or finance deals. I think you may be confused.

8

It’s considered $7500 lease cash, it’s not technically a federal rebate to you. Kia is passing it along in the form of “lease cash.” Idk why this dealer isn’t passing the full amount according to your numbers, find a different dealer who’s not playing games.

9

Yeah, @max_g really needs to spend a bit more time on LH and give up last 30 minutes of sleep a night. Slacker!

BTW, Sapling = garbage.

1 Like
10

That’s pretty much what I thought. It’s advertised on their site but they insisted it doesn’t exist.

Quite frankly, that would be the beginning of my concerns. They are offering the same 7500 lease cash on the 2024s so I did tell them if they want to move aging inventory, 1500 isn’t going to do it.

I knew it seemed off.

11

I didn’t say he was a slacker but he seems to have been giving advice that directly conflicts with your post. He said repeatedly that the EV tax credit lease loophole didn’t exist.

Should I just accept what he says even if he’s demonstrably wrong? This is how we all learn.

I may be new to leases but I am absolutely well educated on EV tax credits having bought 3 so far and working on a used ev tax credit with my dad. Apologies if I offended anyone’s ego.

12

Just an FYI, it’s the Bank that owns the Vehicle in this case, not the dealership.

When you lease a car, the bank (in this case Kia) gets $7500. Signing a lease means the Bank (a company) purchases the car from the Dealer at the price you negotiated.
This invokes IRS 45W who gives them a check for $7500. Now for some obscure reason (or maybe an obvious one) they are not passing the whole amount on the Niro (But are on the EV6).

Now way back when this law was signed, no one passed the $7500 until someone (a reporter I think) said , hey the Bank gets $7500 and all of a sudden a flood of $7500 off EV leases appeared.

So when you think about it, #2 and #3 are the same thing. The bank is passing money as an incentive and is not forced by the government to pass $7500 anywhere.

But Why isn’t Kia passing $7500 on the Niro? I think they want to sell more EV6s. Toyota isn’t passing $7500 on the Rav4 Prime either, it’s $6500.

13

Yeah, that makes sense. I suppose these probably are on floorplan. Like you said though, realistically it there really isn’t an important distinction between dealership and Kia.

The think that makes me wonder is yes, they obviously want to sell more ev6s, but this is aging inventory. I could see them only passing 5k on the 2024 model, as it would incent aging and the ev6 but right now their website is promoting the 7500 lease cash on both the 24 and 23. This means with them holding it back, the only incentive to choose a 2023 still on the lot over a 2024 is $1500. The dealers is giving 4k. This means that Kia is effectively hamstringing the dealers on aging inventory. If they are actually doing this, I’d be pissed as a dealer.

The thing is, they are offering 5k on cash deals where they wouldn’t be reimbursed at all AND they wouldn’t be getting back end finance income. The dealer was still giving the 4k. I would expect that they would at least honor the cash rebate they are giving and the 7500 pass through since it wouldn’t effect their deal at all. It’s money that wouldn’t exist without the lease and it would get the deal done on an aging unit.

The dealership was adamant that the 7500 tax credit simply did not exist. Even after I showed them the articles and it’s guidance on it. I suggested calling their rep. Ultimately I don’t have to buy it as it appear Kia doesn’t want it to move. It’s literally the only reason I was even considering buying one.

14

There is a way to do this, if the dealer is using an alternative bank AND that bank (ally, us bank, Credit Union) is passing the 7500. The price would get the ‘cash incentive’ and the alternative bank would get 7500.

Ally was giving some good rebates on PHEV way back when 45W was discovered but I don’t know if anyone is giving 7500 on EVs right now. That would take some digging.

15

In the past, Kia would advertise a $7,500 EV Lease Bonus comprised of a $5,000 rebate and $2,500 in residual value support:

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It’s ultimately up to the captive how much of the $7,500 commercial tax credit to pass on, and whether to offer it as a lease rebate or residual value support or both. The former is better if the lessee wishes to buy out the vehicle, while residual value support could be beneficial in that the lessee avoids paying sales tax on the rebate.

In the case of 2023 Niro EV, it looks like KMF now offers $7,500 lease cash, so I’m not sure where the dealer is finding the $5,000 figure. Perhaps it’s a non-captive lender or they’re looking at some bulletin from a few months ago.

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16

Yeah, i will have to have a conversation with them

17

It was whatever system they were using internally. They showed me whatever f&i uses for accounting and setting up deals. Either they were fed bad info or they were lying. I can’t imagine they are that ignorant of a way to obtain more money.

I am still going to try and swing getting the 5k from kia and 7500 from a different lender. I do have a question and I will probably just google it. What is a captive lender? Can I source my own lender for a lease that might pass that through?

18

Different car but this is similar to what I’m trying to do with a 2023 Ioniq 5. Dealer website says 15,000 off, but the salesman on the phone is saying $7000 down and 500 a month. The numbers don’t add up.

19

Yeah, I think there is some funny business going on. I mean it’s their choice as it’s their product to sell, but I would personally vote with my wallet. No way I would sign on these unless they actually give a deal. I think they are a bit scared that it’s not going to be easy street anymore.