Lease Kia Sorento PHEV - Check my Numbers - Think Early Buyout -NY

Ask the Hackrs
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1

Good Day,

To be upfront, this is the first new car I am acquiring. Have read a few other sites and done the foot work, contacted about 20 dealers, have a dozen offers, below is the best. Had planned to purchase, then read about the federal incentives still available via leases, considering leasing and buying out ASAP. Would like to confirm I am thinking about this correctly…
Here are the figures I just received via Edmunds for my 12866 zip code in New York

24 months .00238 MF and 79% residual. $3400 lease cash
36 months .00256 MF and 72% residual. $4650 lease cash
48 months .00268 MF and 60% residual. $6410 lease cash

There is an additional NYS $500 tax incentive applied directly at time of purchase.

Best Deal I have found:
2025 Kia Sorento PHEV SX-P
New York
55,185 MSRP
-2,207 Discount
52,978 Net Price
175 Doc Fee
3,708.46 Tax
222.50 Non Tax Fees
57,083.96 Total

-500 NYS Drive Clean
-6,410 Kia Special Financing
50,174 Total after all discounts etc…

Link to my LEASEHACKR CALCULATOR

My questions are:

  • Do I have the numbers in the correct places in the calculator?
  • If I will save about 6,000 over buying direct this makes sense to do, correct? (6,410 less the 650 acquisition fee, or if that is capitalized, do I not even end up paying all of it with the quick payoff?)
  • I think its obvious, but… I want the 48 months lease to maximize the amount of credit, correct?
  • Will I end up double paying any taxes?
  • Anything else I need to ask the dealer or watch closely (aside from everything)
  • I have 3055 due at signing for fees, tax and first payment, what will my buyout be?
  • What else am I missing or should I be asking about? Again, new to this.

With thanks!
J

2

Are the various numbers you’ve listed for differing lease lengths?

The $6410 is listed in one line of your post as “lease cash” and in another line as “Kia Special Financing.” Which one is it?

3

Thank you for the reply. I updated the table with month labels, that was an oversight.
Unsure on the proper name for the incentive, at the kia.com website after ‘building’ the car and clicking the calculate payments button they list it under Discounts as “2025 Kia Special Financing - $x,xxx”(depending on the term you click the value changes). The ‘lease cash’ term came from the reply to my post over at Edmunds requesting the MF, RV and any current incentives.

4

Yes. I confirmed all calculations manually. I assume all your input data is accurate. All the fields appear to be populated correctly.

I have no idea what you’re talking about.

Don’t know what you mean “to maximize amount of credit”.

You will pay tax on the buyout amount if you exercise your purchase option. This is in addition to the taxes you will have already paid.

Read your lease agreement- early termination- purchase option. If you purchase within 30 days of leasec signing, most fund providers calculated your buyout as follows…

1st. Compute the Adjusted Lease Balance (ALB)

ALB. = (Adj. Cap - 1st base payment) x (1 + CYR/12)

CYR = Constant Yield Rate referenced (but not disclosed) in your lease agreement. Your CYR = 6.4424…% Your base payment is 497.42. And your adj. cap = 46718.00

next,

Your buyout = ALB x 1.07+ purchase option fee + applicable admin fees

Don’t waste time trying to decipher a dealer’s numbers or chasing after them. Otherwise, you’re allowing them to control the deal. They often omit a lot of relevant detail such as money factor, monthly base payment, monthly contractual payment, fees not itemized and even make mistakes. You need to rely on credible outside sources (e.g., LH marketplace and signed deals, Edmunds, etc.). Do your own research and establish a reasonable selling price in your market. Be sure to get a copy of the factory window sticker. Check for non-factory add-ons or dealer-installed options. And, if possible, eliminate those you don’t need or want. Get a list of all customer and dealer rebates/incentives including VIN#-specific discounts/incentives, if any. And, yes, the dealer has such a list.

Craft a lease proposal (example below) and email it to the sales manager (SM), not a floor salesperson as they’re often order takers and lack knowledge.

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All numbers should be accurate otherwise, you’ll lose credibility. Negotiate via phone/email. Once an agreement is reached, ask the dealer for a review copy of the lease agreement and all contract addenda BEFORE you go to the dealer and sign. Moreover, it’s helpful to know the terms and conditions of the lease contract such as early termination liability criteria and purchase option criteria as well as lease amortization methodology and excess wear/tear criteria. If all is as agreed, tell the SM that you’ll come in to sign right away. You don’t want any surprises or dealer excuses like …. Oh, we made a mistake. That’s unacceptable and shouldn’t be tolerated.

If the dealer isn’t transparent or is uncooperative or showing signs of incompetence, WALK AWAY AND MOVE ON!

Leasing is time-consuming and requires a good deal of study and attention to detail. If you don’t have the time to commit, perhaps your best alternative is a good broker. There are some outstanding brokers on this website. However, if you’re willing to commit your time and resources, always control the deal. That can only be achieved with education which breeds confidence and increases the likelihood of success.

??? Let me know.

5

Since youre in NY, you want the lowest total lease cost to lower your tax liability, so probably a 24 month lease. You don’t want a 48 month unless it has much higher incentives.

6

24 month has a 3400 incentive
48 month has a 6410 incentive
3010 difference

If I am planing to buy the lease out does this matter? Can you expand on your lowest total lease cost comment?

7
  1. Correct. You’ll pay the whole acq fee either way
  2. Correct. Choose the term with the most lease cash
  3. Your best bet will be with a one-pay lease followed by immediate buyout: you lower the taxes on the lease via a lower rent charge via a lower MF. And you pay less tax on the buyout, which should be RV less unearned rent charge.
8

Thank you for taking the time to reply, I am not a forum formatting expert so please excuse my reply…

I am saying, if I lease the car and then buyout the lease in month one, I will save around 6000 vs just buying the car cash since I can not get the incentives with a purchase, only with a lease.

48 months has the greatest amount of incentive available

I have done my research and believe the selling price I have is reasonable. Collected about a dozen itemized comps. This is the best. There are no add-ons or dealer junk options, the doc fees are reasonable at 175 and 222 for registration, much better than what I saw with other quotes. I have the window sticker. Asked local dealer if they wanted to match it, they said no, it’s too low.

Do I still need to make one of these lease proposals to send it or do I just tell them I want the 48 month lease and then double check that the numbers line up with what we have here?

My big reason for coming here is to confirm after doing this whole thing to lease the car and then buy out the lease, I am going to come out around 6000 ahead vs if I just bought the car, correct?

9

In NY, you pay sales tax upfront on the total lease cost and then you pay the tax on your buyout, so with a 48 month lease, youre going to pay more in total taxes.

Youd want to compare the differences in incentives due to lease term with the differences in taxes. You may find that a 24 month lease with a lower incentive costs you less money than a 48 month lease with more incentives due to the extra taxes.

10

I think you should construct lease alternatives and compare them as @mllcb42 suggests. Once you’ve decided, then send a lease proposal.

11

Working on a table in excel to compare the options per @mllcb42
Have it set up to calculate buyout though spinning my wheels some on this tax concept.
I understand in NY I will pay the tax upfront on the lease and I can grab that number from the calculator(or calculate as lease payment x months, + taxed incentive +dealer fees*1.07).
I think what I am missing, forgive me it’s past my bed time, is how to calculate the tax on the buyout. It would not make sense to pay 7% on the full buyout amount, as I have already paid a fair portion upfront.
Thank you for answering this simple question

12

And yet, that’s what NY charges.

13

It’s not just NY. Most states consider the lease transaction and the buyout transaction as two separate and distinct transactions. So, you will pay tax on both transactions. Yes, it is unfair. But until Americans start to unify and fight these abuses by playing smash mouth, they will most definitely continue. In fact, they’ll get worse. Talk accomplishes nothing.

14

Wow, thank you for confirming the tax rules, thought I was just tired. The good news is we all have a chance to vote in about two weeks! We can take our concerns to the ballot box.

Made a sheet and compared the 24/36/48 leases vs cash or finance, intent to pay any option off ASAP. Cash is Cash, with finance they have a 1000 incentive plus the NYS 500 incentive.
I believe the MF can go down some with a single pay, the guy on Edmunds forum did not have access to the single pay MF, not sure it matters much in my scenario.

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Please take a look at the file and correct me if I am wrong, it looks like the 48 month single pay lease is the least expensive option. This does not quite ‘feel right’, am I missing something with the taxes or buyout calc?
J

@max_g

1 Like
15

Use the LH calculator.

Ofc it matters. Onepay reduces the MF which reduces the total lease cost which reduces the tax charged on the lease.

16

I did used the LHCalc, ran it six times to populate my summary sheet. When selecting the single pay, the calc just say “Check Rate Findr for your model’s latest one-pay lease money factor reduction” it does not give an adjusted rate.
My point is that if the money factor goes down a bit, great, it will save a few more dollars, though should not substantially change the picture of the deal.

Please take a look at my comparison sheet, it looks like the 48 month single pay lease is the least expensive option. This does not quite ‘feel right’, am I missing something with the taxes or buyout calc?

17

Why is that?

18

Because while I am a numbers and excel person I have no experience in this spicific field. If it was my area, I could look at the sheet and say, yes, that makes sense, seems right. I look at this and say, is it really that easy to achieve this savings by making it a 48 month single pay, did I make a mistake somewhere, or is this correct?

From what I have learned the last few days, NYS taxes you upfront on the value of the lease and then again on the buyout. Thinking through it, going the single pay route and then buying out during month 1 is sort of a work around. You essentially make the payment upfront which covers about half the cost of the vehicle and then buy out in month 1, with the buyout covering the other half. You only pay tax on the buyout amount (which is reduced since you made such a large upfront payment) there by eliminating the ‘double taxation’ issue.

Am I thinking about this correctly? How does my buyout calculation look on the sheet?

19

You’ve described the hack in a nutshell.

Post a LH calc link for the 48m. I for one am not clicking any excel file download links.

It’s easy for the right person. Most people can’t do a one-pay

20

Most people live above their means, thats another story. If I knew how to hack computers from excel I would not be trying to save 5,000 on a car purchase, I would be on a tropical island :joy:

1 Pay 48 Months LHCalc

Snip of the excel summary sheet

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Thank you for sharing your experience.
@delta737h