RAV4 prime PHEV lease and buy out

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62

I just completed a lease buyout of a 2024 RAV4 Prime XSE.

Here was the bottom line - North Carolina buyers take note:

MSRP:
$52,863.00

Dealer discount (Coleman Toyota in Bethesda, Maryland)
$2405

12k/24 month lease, $0 down, first payment:
$877.00

Buyout price, including NC 3% sales tax $1405, $698 doc, $350 disposition fee, $30 inspection, $110 title/tags:

I am expecting a refund of $825.00 for a GAP policy that did not intend to buy. I flew up to Maryland to get the car, waited a while, and then was signing furiously. I wanted to get out of there and wasn’t paying attention I guess when the finance manager just slipped it in. I’m sure he mentioned it quickly but yeah, whatever. The refund application was processed the day after I signed the lease, and according to Toyota Financial would be cancelled anyway by the buyout.

Total cost, including first month payment and minus GAP refund:

$48,432.28

Maybe add $200 worth of airline miles and gas to get from North Carolina to the dealership in Maryland and back.

This should have been c.$1050 less, but because I live in North Carolina I was required by law to complete the buyout at a dealership - a law probably pushed through by the strong dealership lobby here. I therefore had to pay a $350 disposition and second doc fee of $698. This was really annoying and also cost me three more hours at a dealership - it was like buying another car. I might have been able to avoid this fee had I taken out a loan from a bank and let them complete the transaction, but that was one more hoop I didn’t want to jump through. In retrospect, given how much time I spent at the dealership, maybe I should have. But yeah, just didn’t want to deal with it, and now it’s done. Basically, I gifted an NC dealership a grand - so the law is doing what dealerships intended. But I was able to give a sale to the nice saleswoman who showed my wife a car a few weeks earlier that we didn’t buy, so there’s that I guess.

I still saved a good bit. If I hadn’t done the lease and just got the dealer discount of $2405, my OTD cost would have been c.$52,761.00, so I saved an additional $4300 or so. If I didn’t live in NC, I would have saved closer to $5400 more. So, I’m still pretty happy with the deal overall - and got a car I wanted but couldn’t find in North Carolina.

This forum helped out a lot. I appreciate everyone who contributed to this thread.

3 Likes
63

Hi, sorry I didn’t respond to this earlier. See my post below - Jim Coleman Toyota in Maryland. They have a lot of RAV4 Primes and are pretty easy to deal with. Doc fee was, by comparison, pretty reasonable at $500.

64

This would have been due regardless of if you went through a dealership or not.

Did your lease contract specifically state that a dealer document fee would be due on buyout through a dealer?

65

No, not that I know of - I just quickly perused it. I was told by several dealers in NC that this was the process. And the dealership I leased from two weeks ago in Maryland told me that if I bought out through them I would pay their doc fee again. I’ve read about another NC residents experiences with Toyota and BMW going back years. I don’t think it’s avoidable. If they process the paperwork for a buyout, the doc is charged.

Maybe I’m wrong, but this just seems to be what you pay to get out of a lease in NC. I called Toyota Financial and they even apologized to me that I had to pay the doc, but their hands were tied due to the state law.

I do feel better than I’m only out $700, not $1050.

66

If you wanted to push it, charging fees on the buyout not listed on the original contract is a violation of consumer leasing act of 1976. A bunch of dealers have been running into legal issues with that practice lately. You’d need to read the contract in detail though, as they often have a catch all that at least covers doc fees.

67

I think I found it. Paragraph 32.
…
The price to purchase the Vehicle during the lease term is the total of:

b. all official fees and taxes, and documentary fees charged in connection with purchase of the vehicle.

So, since NC requires by law lease buyouts to be handled by dealers, this language probably covers their practice of charging doc fees. I suppose I could have tried to bargain with them, but I’ve never had a dealer budge on a doc fee. They will take it out of the selling price before they remove it.

Anyway, $700 to get out of the lease and still save $4400? I’m okay with it.

FYI - for anyone reading this: shoutout to Jerry Coleman at MidWest Toyota in Hutchinson Kansas. He is the man to go to for extended warranties. I bought a 10 year/125k from him for $1800. The dealer who processed the buyout wanted $700 more. I know that the RAV4 Prime probably won’t need it, but I tend to keep cars for 3-4 years, maybe 70k-80kmiles.I think the extended warranty will make private resale easier.

68

yah, that looks like the standard catch all language for doc fees.

69

Oh, the “doc fee”.

I looked at the saleswoman, chuckled, and said, “Ah yes, the doc fee - we all know what that is. It’s funny how you all can even say it with a straight face.”

She laughed and said, “I know, right?”

70

So before the GAP refund you’re at ~$49,250?

I don’t understand how with a $2,5xx discount and presumably $6,500 rebate

71

Look, I’ll admit I didn’t pay too much attention to the lease - first one I’ve ever done. I knew the buyout was going to work - wasn’t sweating the details, I probably should have. But this is the rough math - it’s kind of adding up, Please don’t beat me up too much for not getting this exactly right :slight_smile: All I know is it all worked out for me except for the final $1050 (and I guess I had to pay the $350 disposition anyway), Total amount of money that will leave my bank account once GAP is refunded - and leave me with a title - is under $48,500.

$52,863 MSRP
-$2405 discount
-$6500 lease cash
=$43958

$855 (initial payment)
$1405 (3% NC sales tax - you have to pay this on the payoff amount, which was $45815 after first payment - and included GAP and other fees)
$500 (MD doc)
$195 (initial taxes)
$190 (MD tags + NC tags)
$650 (acquisition)
$698 (NC doc)
$350 (disposition)
$110 (NC tags, 2nd time)

= $48,911.00 (and I guess this is reduced by around $500 from the first payment, which brings me to around $48,500)

Kinda seems right to me? Maybe? I know, this is almost as bad as my 15 year old daughter’s girl math.

2 Likes
72

Apologies But, why did you need NC tags twice? Also, for NC buyout, Can i approach any dealer (for negotiating)?

73

Your buyout amount is stipulated in your contract. You dont get to negotiate on the buyout, only the original lease

74

I understand that, but OP was mentioning of this NC law which forces you to go to a local dealer for buyout. The NC doc fee is about 700 which is absurdly high?

75

Yeah, I don’t know. I still haven’t received my original NC tags that the dealership I leased the vehicle from in Maryland applied for. The dealership that processed the buyout just set me up with new NC tags and I didn’t question it. Doing the buyout was like buying the car again - took 2 1/2 hours at the dealership. I just wanted out of there. I wasn’t quibbling over this $110 after already gifting the dealership $700 (which is a pretty average doc fee in the Southeast).

76

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Got a question regarding this lease and buyout transaction, LH family.

Will a down payment lower the sales tax on the buyout?
I’m getting a 1500 discount with 6500 lease cash and maybe some parts added to the deal, about 390s worth.
I’m in SoCal and it’s hard to get a Prime with Premium package.
I thought about looking out of state but with the transportation costs it’ll cancel out most savings I will get vs a local dealer.

First timer with lease so I’m a bit confused on the money factor part (which some have said to disregard since im planning to buyout right away).

Any advice would be appreciated.

Thanks to everyone in advance. I’m a noobie here.

77

You’ll either pay the sales tax on the down payment or you’ll pay it on the buyout. Won’t make a difference

1 Like
78

Thank you for your reply.

To be more specific, will the sales tax be based on the net cap cost? Is the net cap cost the buyout amount??

Thank you so much.

1 Like
79

The sales tax will be based on the buyout amount.

The buyout amount, on an immediate buyout, is approximately equal to the net cap cost.

If you put a down payment down, you’ll lower the cap cost, and as such, the buyout amount. That’ll lower your tax on the buyout, however, you’ll pay tax on the downpayment amount when you make it. So you either pay it upfront or on the back side.

1 Like
80

This depends on state.

In MA, you can save on sales tax if you put a higher down payment on a lease and immediately buy it out.

1 Like
81

I am see the below for a MD Toyota dealer. I am in NC as well so will have to do drive up for the purchase. I am not seeing a $0 down initial payment offer. Is it over?

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