Buying out of brand new lease?

I just signed a lease for a car 2 weeks ago, and today when I logged in to my account through Kia finance, I saw the buyout amount listed on the site. The buyout amount is significantly lower than what I would pay for my 36 month lease + residual to purchase the car. I like the car, and plan to purchase it either way. Is there anything I am not considering for the calculation (taxes/fees built in to monthly payment that I will owe dealer?)

The numbers:

MSRP $33,000

Trade-In + Total payments + Residual $5,700 + $5,200 + $17,100 = $28,000

Trade-In + Buyout Price $5,700 + $19,100 = $24,800 (I would pay buyout in cash)

This seems too good to be true. Am I missing something?

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If you buy it out, you don’t have to pay the rent charge on your remaining months. And since the MF for KMF is typically very high, that’s a huge savings. So I don’t think you are missing anything.

Strange that the buyout is less. Usually it is just monthly payment x remaining payments + fees. Are we sure they forgo the rent fee if you buy out? Most mamufactors don’t, they still want their money.

This is a common strategy for those who want to buy a Kia (and possibly Hyundai too?). Kia structures their leases with large up-front lease cash incentives to make you think you got a good lease deal, but they recover that money by charging a high money factor. Savvy purchasers will lease the car to get the lease cash, and then buy the lease out right away to avoid paying the high interest rates. You can end up getting the car for less than if you bought with cash.

You never have to pay remaining rent charge when you buy out a lease - because you’re not renting the car anymore. Any finance company is like this, but if the money factor is low you don’t notice the rent charge savings as much.


Why not just call and ask them if there’s any “catch?”

I called the dealer and they want me to come in. The dealership is far away, so I was hoping to check here first. Maybe I’d be better off dealing with KMF directly? But what I’m trying to avoid is buying out the car from KMF, and then getting some bill for fees or taxes I wasn’t expecting.

It’s between you and Kia now, the dealer seems irrelevant to me. Just call them up.


Your monthly payment includes interest and tax, the buyout usually does not. If your sales tax rate is around 8% you would have to add another $1920 to the buyout price.

Based on 8% of which number? And some of that would be owed for purchase at the end of the lease, no?

What does your lease agreement say regarding early buyout? If you like, PM me and I’ll be glad to take a look and calculate your buyout.

Or he/she could just call Kia Financial and get the buyout from them?

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They could call Kia Financial for the payoff. However, it’s always best to do the calculations yourself. What if KFS makes a mistake? I’ve seen it happen with other providers. It doesn’t happen often but, it does happen…

My KMF buyout quote was dead on. It included NY tax and any monthly payments that were due. I didn’t have any fees and still received the title a couple of weeks later. Just read the “small print” carefully:

*Buyout Information

The buyout amount shown may include sales tax*, any past due amounts you owe and any other amounts as set forth in your finance agreement. Buyout amount is subject to increase if a payment due date is missed and no payment has been received.

*sales tax is collected by HCA in the states of AZ, CA, CT, ID, KS, ME, MI, MS, NV, NJ, NY, OH, TN, UT, WA & WI. In all other states taxes are collected by the state typically at the time of registration. Please call us for detailed information regarding sales tax remittance on your individual buyout situation.

Ok, so I am in IL so my taxes won’t be included in the quote. I guess the only remaining question is, how do I calculate how much taxes I would owe at the end of the lease, vs what I will owe if I do the buyout, so that I am comparing apples to apples?

I think you’ll have to call KMF. If I had to guess, it will be on the total amount of the buyout, so whatever the amount you send KMF either now or at the end of your lease.

Ok, I will call them on lunch and update here.

KMF was able to confirm that I only owe Kia the buyout amount, but they told me to talk to a tax attorney about the taxes I would owe, which is really frustrating because that is the crux of the whole situation…

Then you can call DMV of Illinois. On the web they state you pay tax on car’s “value”. But I’m pretty sure it will be the buyout amount, plus some registration and title fees.

Rent fee is an interest and Kia can’t charge it if it has not been earned. They could want their money all day long but if you payoff early, you pay off early. Unless there is a prepayment clause in the contract there is nothing they can charge for that forgone rent.

Please don’t confuse buyout with lease balance. In most lease contracts that I’ve seen, the lease balance is the present value of the remaining payments plus the present value of the residual discounted at the implicit interest rate in the lease. I believe in most states, the buyout would be…

(lease balance + purchase option fee (if any)) x (1 + tax rate) + gov. fees (other than titling) + title/registration fees