# Trying to understand old post about lease buyout **URL:** \ **Category:** Ask the Hackrs\ **Tags:** usa-nationwide\ **Created:** [August 9, 2025, 11:11pm UTC](https://forum.leasehackr.com/t/trying-to-understand-old-post-about-lease-buyout/702974 "2025-08-09T23:11:16Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![hackr11](https://leasehackr.b-cdn.net/letter_avatar/hackr11/32/5_5575768a8748004e209b776fc1b2916d.png) [@hackr11](https://forum.leasehackr.com/u/hackr11)\ **Post date:** [August 9, 2025, 11:11pm UTC](https://forum.leasehackr.com/t/trying-to-understand-old-post-about-lease-buyout/702974/1 "2025-08-09T23:11:16Z")
It looks like I can not reply to old posts, so I am starting a thread to ask for clarification. Please let me know if I am wrong === ORIGINAL POST === CYR = RATE(term, adj. cap, base monthly payment excluding tax, **-** RV, 1) ALB = PV(RATE, # of payments made, - base monthly payment excluding tax, -RV,1) RATE or CYR is a monthly rate since payments are monthly and interest is compounded monthly. RV = Residual Value Lease Balance = ALB as reported by your fund provider. If there is a disparity of more than a few dollars, then something is very wrong. Assumes all payments are made on time. === ORIGINAL POST === The questions 1. The ALB is the money I need to pay to end the lease and _purchase_ the car. Yes? 2. Are there other fees and taxes I need to pay on top of ALB? How do I compute those properly? 3. Is single pay lease typically better for buyouts like this? Why? 4. If I chose to do this for a single pay lease, how do I compute this? Finally, 2 question that would provide extra context to help me understand the above. 1. Are monthly taxes computed based on the base monthly payment or the base monthly payment + interest charge. Example : Suppose my monthly payment is - 100 depreciation and 20 rent charge Suppose my tax rate is 10%. My tax should be 12 yes? 1. The rent charge is essentially the interest computed from MF into APR and so on yes? 2. Any reason why I can’t add RV + unpaid depreciation to get PV? This is probably not the right way to compute it but I am trying to understand intuitively why this does not arrive at PV? ---
**Author:** ![mllcb42](https://leasehackr.b-cdn.net/letter_avatar/mllcb42/32/5_5575768a8748004e209b776fc1b2916d.png) [@mllcb42](https://forum.leasehackr.com/u/mllcb42)\ **Post date:** [August 9, 2025, 11:18pm UTC](https://forum.leasehackr.com/t/trying-to-understand-old-post-about-lease-buyout/702974/2 "2025-08-09T23:18:57Z")
> [@hackr11](#): > > Are there other fees and taxes I need to pay on top of ALB? How do I compute those properly You’ll need to pay the buyout fee (listed in the contract), any registration/title transfer fees, and sales tax on the buyout (state dependent). In a few states, you may need to do the buyout through a dealer, in which case you can expect to have to pay a doc fee too. > [@hackr11](#): > > Is single pay lease typically better for buyouts like this? Why? Depends on state tax situations, but generally if you’re doing an immediate buyout, it won’t make much difference. ---
**Author:** ![hackr11](https://leasehackr.b-cdn.net/letter_avatar/hackr11/32/5_5575768a8748004e209b776fc1b2916d.png) [@hackr11](https://forum.leasehackr.com/u/hackr11)\ **Post date:** [August 10, 2025, 1:06am UTC](https://forum.leasehackr.com/t/trying-to-understand-old-post-about-lease-buyout/702974/3 "2025-08-10T01:06:35Z")
If a dealer offers X leasecash and I immediately buyout the lease to purchase the car, I should be able to capture 100% of the leasecash as a discount yes? If not why not? and how can I compute how much i lose from the lease terms? If I do a single pay lease would that help me capture more of the lease cash? And does it make a difference if the MF changes with the sibgle pay lease? Do leases have clauses that prevent ab immediate buy out? Those should be in the lease contract yes? Finally will the lease spell out the ALB at 0th and 1st month before I sign? If not how do I figure out this sum? I am hoping this is simpler than computing it for future month X. ---
**Author:** ![SSmith](https://leasehackr.b-cdn.net/user_avatar/forum.leasehackr.com/ssmith/32/168147_2.png) [@SSmith](https://forum.leasehackr.com/u/SSmith)\ **Post date:** [August 10, 2025, 1:11am UTC](https://forum.leasehackr.com/t/trying-to-understand-old-post-about-lease-buyout/702974/4 "2025-08-10T01:11:37Z")
Generally speaking, rebates are used as cap cost reductions that reduce your monthly payments. When you buy out a lease, you pay remaining payments minus remaining interest, so effectively, just paying the remaining payments sans interest is effectively how you get the extra discount. People used to do this a lot when i4’s and iX’s first came out if they wanted to buy them. I’m sure the resident math-lete will chime in and explain how I am wrong in some minor way, but generally speaking what I am saying is true for most brands. Other ways to maximize in a scenario like this would be if the brand offers an acquisition fee waiver in exchange for a money factor increase, as you’ll never be paying that interest anyway. ---
**Author:** ![hackr11](https://leasehackr.b-cdn.net/letter_avatar/hackr11/32/5_5575768a8748004e209b776fc1b2916d.png) [@hackr11](https://forum.leasehackr.com/u/hackr11)\ **Post date:** [August 10, 2025, 1:47am UTC](https://forum.leasehackr.com/t/trying-to-understand-old-post-about-lease-buyout/702974/5 "2025-08-10T01:47:15Z")
Just to make sure I understood you right, I _can_ captured close to 100% by doing this, yes? ---
**Author:** ![SSmith](https://leasehackr.b-cdn.net/user_avatar/forum.leasehackr.com/ssmith/32/168147_2.png) [@SSmith](https://forum.leasehackr.com/u/SSmith)\ **Post date:** [August 10, 2025, 1:59am UTC](https://forum.leasehackr.com/t/trying-to-understand-old-post-about-lease-buyout/702974/6 "2025-08-10T01:59:33Z")
As long as the bank isn’t doing some non-standard wacky stuff, yes, that’s correct. Posting what you’re specifically trying to do this with would be helpful. ---
**Author:** ![delta737h](https://leasehackr.b-cdn.net/user_avatar/forum.leasehackr.com/delta737h/32/11316_2.png) [@delta737h](https://forum.leasehackr.com/u/delta737h)\ **Post date:** [August 10, 2025, 2:20am UTC](https://forum.leasehackr.com/t/trying-to-understand-old-post-about-lease-buyout/702974/7 "2025-08-10T02:20:20Z")
If you’re buying out the vehicle within the first 30 days or so, it’s cheaper to do a single pay lease. The lease cash should be used as a cap reduction which will lower the single pay amount so that you capture all of the lease cash. Also, there is a single pay discounted MF in most cases. Under no circumstances should you capitalize (finance) any fees. > [@hackr11](#): > > Do leases have clauses that prevent ab immediate buy out? Never saw any such clauses. > [@hackr11](#): > > Those should be in the lease contract yes? Yup. > [@hackr11](#): > > Finally will the lease spell out the ALB at 0th and 1st month before I sign? No. However, the lease agreement does provide the methodology for computing the ALB. IF you buyout within 30 days, your ALB is… ALB = [(Adj. cap cost - single pay amount (excluding tax)) x (1 + CYR/12)^1 + POF] x (1 + r) + any applicable fees POF = Purchase Option Fee r = sales tax rate (if applicable) CYR = Constant Yield Rate referenced in most lease contracts You can use the Excel RATE function to determine the CYR… CYR = 12 x RATE(term, 0, -ILB, RV, 1) ILB = Initial Lease Balance = Adj. Cap Cost - Single Payment Amount (exclu. tax) > [@hackr11](#): > > I am hoping this is simpler than computing it for future month X. Calculating the ALB after t months have elapsed is a piece of cake… ![image](https://leasehackr-assets.b-cdn.net/original/3X/c/a/cadf14687f20eef67291d0ae1db47ddd4296e9f1.png) ??? Let me know. ---
**Author:** ![voxel](https://leasehackr.b-cdn.net/letter_avatar/voxel/32/5_5575768a8748004e209b776fc1b2916d.png) [@voxel](https://forum.leasehackr.com/u/voxel)\ **Post date:** [August 10, 2025, 2:26am UTC](https://forum.leasehackr.com/t/trying-to-understand-old-post-about-lease-buyout/702974/8 "2025-08-10T02:26:54Z")
It also depends on the state. Some states tax incentives. The Ioniq 5N I just leased had $16500 but FL slaps a sales tax on that incentives (which cost me $1500) plus $650 lease acquisition fee. In realty you are probably capturing 80-90% of the incentive. ---
**Author:** ![darylp310](https://leasehackr.b-cdn.net/user_avatar/forum.leasehackr.com/darylp310/32/148059_2.png) [@darylp310](https://forum.leasehackr.com/u/darylp310)\ **Post date:** [August 10, 2025, 2:38am UTC](https://forum.leasehackr.com/t/trying-to-understand-old-post-about-lease-buyout/702974/9 "2025-08-10T02:38:07Z")
Do you mind sharing which car you are interested in? Depending on the manufacturer you may not necessarily want to buy out the lease right away. For example, BMW iX leases have subsidized interest rates. So if you are only paying 1-2% interest on your BMW lease balance, it doesn’t make financial sense to pay it off until near the 36 month mark! ---
**Author:** ![Wtmeyer](https://leasehackr.b-cdn.net/user_avatar/forum.leasehackr.com/wtmeyer/32/168356_2.png) [@Wtmeyer](https://forum.leasehackr.com/u/Wtmeyer)\ **Post date:** [August 10, 2025, 6:43am UTC](https://forum.leasehackr.com/t/trying-to-understand-old-post-about-lease-buyout/702974/10 "2025-08-10T06:43:00Z")
You are way overthinking this. It is pretty simple. If you plan to immediately buy the vehicle just to capture the lease cash, negotiate the biggest discount possible. This may include agreeing to a higher money factor in exchange for a bigger discount. After you sign the lease and drive away, wait a few weeks for the bank that owns the car to set up your online lease account. Once that is done, contact the bank and get your payoff. It will be very close to the total amount you financed via the lease which included all the incentives. There will be a little bit of interest plus the buyout fee included in the payoff. Send the bank a check and the vehicles is now yours. You will likely incur additional fees and taxes to re-register the vehicle in your name depending on how your state DMV works. Specifically you may now owe tax on the total value of the vehicle if these taxes were not collected when you signed the lease. It really depends on your state. Some states only tax your lease payment during the term of the lease. Others charge full taxes upfront at start of lease. ---
**Author:** ![hackr11](https://leasehackr.b-cdn.net/letter_avatar/hackr11/32/5_5575768a8748004e209b776fc1b2916d.png) [@hackr11](https://forum.leasehackr.com/u/hackr11)\ **Post date:** [August 10, 2025, 7:16am UTC](https://forum.leasehackr.com/t/trying-to-understand-old-post-about-lease-buyout/702974/11 "2025-08-10T07:16:33Z")
Is a single pay lease cheaper than immediate buy off even if the single pay lease does not reduce the MF? I am also running into a problem where I asked the dealer to give me a single pay lease and they say no such thing exists! huh?! Any advice on how to deal with that? Any advice? ---
**Author:** ![hackr11](https://leasehackr.b-cdn.net/letter_avatar/hackr11/32/5_5575768a8748004e209b776fc1b2916d.png) [@hackr11](https://forum.leasehackr.com/u/hackr11)\ **Post date:** [August 10, 2025, 7:22am UTC](https://forum.leasehackr.com/t/trying-to-understand-old-post-about-lease-buyout/702974/12 "2025-08-10T07:22:26Z")
If I buyout a lease at the end of the lease life, what is the total i have to pay after accounting for all taxes and fees? 1. RV 2. Purchase Fee 3. Do I still owe sales tax on the RV? 4. Any other major tax/fees? ---
**Author:** ![mllcb42](https://leasehackr.b-cdn.net/letter_avatar/mllcb42/32/5_5575768a8748004e209b776fc1b2916d.png) [@mllcb42](https://forum.leasehackr.com/u/mllcb42)\ **Post date:** [August 10, 2025, 11:38am UTC](https://forum.leasehackr.com/t/trying-to-understand-old-post-about-lease-buyout/702974/13 "2025-08-10T11:38:23Z")
If you owe taxes depends on your state, but generally yes, you will owe taxes. You’ll also have to pay title transfer/reg fees. Doing a one pay and then immediately buying it out will be marginally less expensive, but you’re talking a few dollars. If the bank offers a one pay and the dealer says they have never heard of it, what they’re really saying is “we don’t know how to do it without screwing it up, but we don’t want to look like idiots, so we are going to blame it on the bank”. ---
**Author:** ![delta737h](https://leasehackr.b-cdn.net/user_avatar/forum.leasehackr.com/delta737h/32/11316_2.png) [@delta737h](https://forum.leasehackr.com/u/delta737h)\ **Post date:** [August 10, 2025, 11:54am UTC](https://forum.leasehackr.com/t/trying-to-understand-old-post-about-lease-buyout/702974/14 "2025-08-10T11:54:48Z")
> [@hackr11](#): > > Is a single pay lease cheaper than immediate buy off even if the single pay lease does not reduce the MF? It’s best to run the numbers and see. If the MF (buy rate) is already low to begin with, it probably won’t matter much. It’s rare that the MF isn’t discounted for a single pay. At least, that’s been my experience. > [@hackr11](#): > > I am also running into a problem where I asked the dealer to give me a single pay lease and they say no such thing exists! huh?! I would tell them that they do exist and I’m very sorry that you don’t know this… I’ll take my business elsewhere… thank you very much. I refuse to favor stupidity with my business and have no problem slamming them for their ineptness. > [@hackr11](#): > > If I buyout a lease at the end of the lease life, what is the total i have to pay after accounting for all taxes and fees? You might find this useful… [Single Payment Adjusted Lease Balance Calcuations, Optimality, and Purchase Option.pdf](https://forum.leasehackr.com/uploads/short-url/nG5qEXBcbMEpWTHtGtPzRtzBNqb.pdf) (948.6 KB) ---
**Author:** ![max\_g](https://leasehackr.b-cdn.net/user_avatar/forum.leasehackr.com/max_g/32/9426_2.png) [@max\_g](https://forum.leasehackr.com/u/max_g)\ **Post date:** [August 10, 2025, 12:31pm UTC](https://forum.leasehackr.com/t/trying-to-understand-old-post-about-lease-buyout/702974/15 "2025-08-10T12:31:53Z")
> [@hackr11](#): > > If I buyout a lease at the end of the lease life Why? Worst way to own a car. ---
**Author:** ![hackr11](https://leasehackr.b-cdn.net/letter_avatar/hackr11/32/5_5575768a8748004e209b776fc1b2916d.png) [@hackr11](https://forum.leasehackr.com/u/hackr11)\ **Post date:** [August 10, 2025, 6:46pm UTC](https://forum.leasehackr.com/t/trying-to-understand-old-post-about-lease-buyout/702974/16 "2025-08-10T18:46:13Z")
EV’s 3 years from now might be much better or not. If it is better I ditch the car, if not I buy it. I would go in negotiating for a big residual ---
**Author:** ![mllcb42](https://leasehackr.b-cdn.net/letter_avatar/mllcb42/32/5_5575768a8748004e209b776fc1b2916d.png) [@mllcb42](https://forum.leasehackr.com/u/mllcb42)\ **Post date:** [August 10, 2025, 6:49pm UTC](https://forum.leasehackr.com/t/trying-to-understand-old-post-about-lease-buyout/702974/17 "2025-08-10T18:49:45Z")
> [@hackr11](#): > > I would go in negotiating for a big residual Residual is non-negotiable ---
**Author:** ![hackr11](https://leasehackr.b-cdn.net/letter_avatar/hackr11/32/5_5575768a8748004e209b776fc1b2916d.png) [@hackr11](https://forum.leasehackr.com/u/hackr11)\ **Post date:** [August 10, 2025, 7:37pm UTC](https://forum.leasehackr.com/t/trying-to-understand-old-post-about-lease-buyout/702974/18 "2025-08-10T19:37:27Z")
then why is are some dealers giving me a 51% residual and others giving me 67%? If different dealers can choose a different residual, then the same dealer can also choose a different one? What am I missing? ---
**Author:** ![paranoidgarliclover](https://leasehackr.b-cdn.net/letter_avatar/paranoidgarliclover/32/5_5575768a8748004e209b776fc1b2916d.png) [@paranoidgarliclover](https://forum.leasehackr.com/u/paranoidgarliclover)\ **Post date:** [August 10, 2025, 7:41pm UTC](https://forum.leasehackr.com/t/trying-to-understand-old-post-about-lease-buyout/702974/19 "2025-08-10T19:41:34Z")
If different dealerships are giving you a different RV for the same model and trim line (I think Audis can have different RVs for different trims w/i in the same model line), the dealerships might using different banks. Which car are you looking at? ---
**Author:** ![mllcb42](https://leasehackr.b-cdn.net/letter_avatar/mllcb42/32/5_5575768a8748004e209b776fc1b2916d.png) [@mllcb42](https://forum.leasehackr.com/u/mllcb42)\ **Post date:** [August 10, 2025, 7:44pm UTC](https://forum.leasehackr.com/t/trying-to-understand-old-post-about-lease-buyout/702974/20 "2025-08-10T19:44:41Z")
> [@hackr11](#): > > then why is are some dealers giving me a 51% residual and others giving me 67%? With that much of a span, it’s likely one is quoting you 24 months and another 36 or something like that. Beyond that, under no circumstance should you be talking numbers with a dealer without already knowing what the residual value is (along with the rest of your target deal, which includes all the lease program) You’re a super supporter, you pay to have access to what they are. [Next page](https://forum.leasehackr.com/t/trying-to-understand-old-post-about-lease-buyout/702974.md?page=2)