Ioniq 5 Leasing as a backdoor into the EV tax credit

Depends on the particular rebates and the state you live in. In Indiana all of the rebates on my recent PHEV lease were taxed.

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Rebates are never applied to “lease payments.” They are applied as incentives, which affect lease payments. How incentives are applied is dependent on what type of incentive it is (dealer cash or customer cash) and not up to the dealer.

For the EV rebate, I think Hyundai would apply it as a customer rebate, so basically would be a cap cost reduction.

@Soccah Have you read the previous posts? A lot of your questions have been answered above.

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Thanks for the info!

But I have my answer, thank you. The ambiguity in how rebates are applied has to do with how the finance guy at the dealership does it. I already know that in my state they are applied by the dealer at point of sale/lease.

However, since the dealer gets the check, they can decide where my “discount” is applied in the lease. Now whether they are applied as a discount to the sales price or as a reduction to the capitalized cost of the lease depends on the F&I person, at the dealer, I assume.

I don’t see how a dealer would apply any state incentives to the sales price. If they did that, then there would be no trace of the state rebate anywhere in the contract.

Other than the taxation of rebates (which the dealer has no control over), how does it make a difference to you? Does your payoff change in any way?

$40,000 - $7,500 is exactly the same as $45,000 - $5,000 - $7,500 for example.

If it’s applied to the sales price doesn’t that mean the buyout price (early or not) will be lower than if the rebates were applied to the capitalized cost? Or do I have that wrong?

Interesting re. if sales price reduced no way to trace rebates were applied. Though I’ve seen them write “MSRP” then a “rebates” line then an “adjusted sales price” line after rebates are applied.

Though am I overlooking something?

Edit: I think I see my confusion. I thought the capitalized cost was different than the sales price (or “OTD” price). But it’s the same. So taxes, money factor, etc., Is all calculated based on the capitalized cost (gross or net?), yes? So if rebates are applied to sales price or capitalized cost it makes no difference.

This is how a dealer manipulates the incentives, in which they are not involved, to make it seem like theyre giving you a discount.

Right. Because it makes it seem like they’re dropping sale price when they’re not?

I think what people are saying is that if the sale price for this car is $35380, then the dealer is giving you 0% discount on MSRP. Which is not a good deal. You should ask a few percentage off of the MSRP pre incentive and then the incentives (either taxed or non taxed) can help you lower the price further. Hopefully the sale price would be under $34k.

Obviously buying the car out would be a bit more complicated and you would have to read this whole thread as well as the lease passthrough thread for it.

Ah, gotcha. Yes I’ve read instructions on early car buyout and seen lease language on how Hyundai calculates it (capitalized cost - depreciation paid). But I feel iffy about trying to go below MSRP with my dealer, only because they have zero ioniq5s in stock (I don’t know if they ever got any). All surrounding dealers out of state are sitting on 10-50 ioniq5s, but my state dealers i don’t think got any cause they don’t have any. And I’m stuck leasing with them because they’re the ones that can apply my state incentives at point of lease.

Do you think, even though they have none in stock (they’re doing a dealer transfer for me get one from a neighboring state), that I can still drop MSRP?

Also, I was told by several dealers that dealers bought ioniq5s at MSRP and there is no way they’ll go below that. But they might be just saying that.

I just feel like I don’t have much leverage since I’m asking them to get the car for me and they don’t have any extra sitting around. They can just say “if you want pay us MSRP, go get it from them then.”

Now that’s possible, and I could do that, but then I’ll have to apply for state rebates on my own rather than at the point of sale, which isn’t a big deal, but it will take 2-3 months to get those checks in the mail (for 4700). Does it make more sense to try and bargain the MSRP down 1-2 k more and if they don’t budge then go to another dealer who is sitting on a lot of ioniq5s and would budge? Maybe I hadn’t thought of that…

They lied.

Just make them an offer, something like 5% off MSRP. Worst they could say is no. Also consider shopping many dealerships. Pretty easy to just draft an email and blast it to 10 dealerships.

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Interesting, thanks for that heads up. I should have known something wasnt right.

I guess I could always apply for rebates as consumer directly to the state and wait on the checks to arrive instead of giving up to the dealer and not negotiating MSRP. I already tried to 'set the stage’s so to speak by emailing the sales person after our conversation with the 7-8 dealers within a two hour drive who all had the ioniq 5 I was looking for in stock. Gave him vin numbers and everything so he could transfer it over. So maybe that’s a subtle way of saying “I can get this somewhere else, so give me a discount” :person_shrugging:

Ill try and see.

Well, if you are comfortable with MSRP. The general advice you’ll find on this forum is to email tons of dealers and go with the one with the largest discount off MSRP. This post might help you with the procedure:

Location: VT

MSRP/Retail: 47,655 (They say it comes with cargo package and wheel locks, neither of which I care about – but even then it adds up to 47,560, so not sure where their number is coming from)
Rebate: 12,200
Doc Fee: 198.00
Gov Fee: 128.00
Capitalized Taxes: 1012.64
Gross Cap Cost: 49,643.64
Cash Cap Reduction: 474.43 (No idea what this is, honestly – I think it’s a dealer discount …)
Cap Cost Reduction: 12,674.43
Adjusted Cap Cost: 36,969.21
Paid by Customer: 1000.00 (don’t understand how he got the 1,000 number for me to pay – I understand paying the first month payment of the lease, and fees, but doesn’t seem to add up to 1000 to me…)

For a 24 month Lease = 24 months w/600 down = $545-565 / month.
Residual Value after 24 months = 30,975.75 (that’s a 65% residual)

He did not give me the money factor.

For a 36 month lease w/600 down = 585-606 a month.
No money factor or residual given. Though the Hyundai Financing Site says the residual after 36 months lease = 25,257 (53% residual).

Now I’m pretty sure this isn’t a good deal, given that they’re getting like 12,000 in rebates (my rebates) even if I’m not the one paying it out of pocket. Looks like I’m getting at most 400-500 in a cash reduction. And working backward with the lease calculator I’ve figured out the money factor (.002 or 4.8% on 24 month lease and .00245 or 5.6% on 36 month lease).

Strategy My plan is to early buyout the car like immediately after leasing, so the money factor isn’t a big deal as I only plan on making one payment. My questions to the leasehackrs out there:

a) there are about 600 of these cars sitting on the lot within 200 miles of me but there are only two in the exact trim, interior and exterior color combo, and drivetrain that I want (it’s rare to find a RWD model in the north east). But those two have been sitting on the dealer lot since November of 2022. I am asking my local dealer to transfer them from the dealer who has the model trim i want to his lot – do I still have room to negotiate MSRP down? What would be a reasonable request given the deal he has already given me? This is an EV – Ioniq 5

b) If I plan on buying out the lease, is the only thing that matters the Adjusted Cap Cost? So whether I do a 24 or 36 month lease (with the difference in residual value) shouldn’t matter at all, correct? I’ve tried looking into how Hyundai calculates early buyout and it looks like it’s a straight: Adjusted Cap Cost + Taxes = Early Buyout.

It is obvious your current dealer is not budging with the numbers so If I were in your shoes, I would contact the dealer with the car I want directly. I would let them know the terms I want (e.g. 36/10), the MF I am looking for, and the final sale price I am targeting for a specific MSRP (e.g. 5% discount over MSRP). I would also assure them that I would sign immediately if the numbers are met.

Let’s see what they come back with. I would negotiate the final deal. If numbers make sense, I would go sign the deal, bring the car home, and once I have all the documents, would buy out the car.

Obviously, I would do the buyout calculation beforehand to see if everything lines up properly and what discount I would be getting.

I know that the MF wouldn’t matter, and neither would the RV but I would still feel better if the dealer uses the base MF.
Others who have done this could answer this better. I believe people have already answered this in the current thread as well as here:

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FWIW, I’ve been getting the same messaging from dealers; specifically that Hyundai has set the MSRP the same as invoice. See article below; granted it’s referring to last year’s pricing structure but still…

Now, I imagine individual dealers’ bottom lines are more complex than just the invoice cost, so it may still pay off to do your due diligence and email a ton of dealers to find a unicorn discount. But if you check out the deal sheets of brokers on this site they advertise 5% discounts on other hyundai models and no discount on Ioniq 5. Also, the best discount I recall seeing in the Signed section was $1,000. All of which is to say, if the OP is getting $400 to $500 in dealer discount then it’s not a “good deal” per se but it’s also not a bad deal, if you want the car…. Just my two cents.

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according to my local dealer (NY) Hyundai does not offer one pay lease options. I’ve been trying to work this deal out but I’m beyond confused.

Sorry, I must have missed something here. What does one pay have to do with leasing an Ioniq and buying it out?

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I was confused too.

The only benefit of one-pay is in some states like Florida with trade-in sales tax savings… where I could trade in my car towards a large one-pay lease so the buyout will incur a smaller “buyout-time” sales tax hit.

I also heard Hyundai does not offer one-pay leases so the point is moot