[supermotozen]

Very interesting discussion here about leasing an Ioniq 5 and getting the $7500 price reduction. I've spoken to a few dealers in my area and while most know about this, I'm frustrated finding someone who understands how it works. It seems I know as much as they do, and I'm still confused.

I did get this lease offer sheet and it at least only includes one add-on for $599, which is mostly eliminated with a $500 discount.

Does this look like a good offer? Is there a way from this to figure out what an early buy back from the lease would cost? Any suggestion on how long I should pay the lease before buying back? I plan to pay cash on a buy back. Thanks!

View attachment 48840

@acadapter, thanks for getting this conversation started, confirming the math and helping others to get the same.

And, thanks @PineNut for posting this sheet. I’m in Colorado too and I think I am at the same point in getting my head around this. Your deal looks exactly like the information I’ve received. One dealer had IR Tint put on for $1295 and the clear bra for $699. They won’t take them off after they’ve been installed.

So, I’m going to try to negotiate the ACC down and make sure that $7,500 is taken off of their price. I’ve heard from one dealer that I can only buyout after 3 months, so I’ll have to call them out on that or just initiate buyout with HMF sooner anyways.

Do you know if we will have to pay taxes at buyout as well?

 

[voxel]

Do you know if we will have to pay taxes at buyout as well?

Depends on the state but the general answer is yes.

When I buyout, I will have to pay 6.5% (whatever my county + state rate is) on the purchase price.

 

[MR_IONIQ]

Depends on the state but the general answer is yes.

When I buyout, I will have to pay 6.5% (whatever my county + state rate is) on the purchase price.

Is it taxes on the residual value or the total value?

like if the car was $50k - $7,500 = $42,500.
At buyout would I pay taxes on the 42,500 or the residual value, let’s say $20,825 (49%).

 

[voxel]

Is it taxes on the residual value or the total value?

like if the car was $50k - $7,500 = $42,500.
At buyout would I pay taxes on the 42,500 or the residual value, let’s say $20,825 (49%).

Buyout price ($42,500).

A state like Florida charges sales tax on the individual lease payments (actually paid) AND the final buyout price you pay. I think sales tax is also levied on the $7500 incentive too.

 

[PineNut]

One concern I had with this lease/buyout approach was if the great Hyundai warranty remains in effect after a buyout. The Hyundai documents I saw said you must be the "original owner" so it came down to the exact definition of that term (with a lease, are you the original owner or is the leasing company the original owner?). This is especially important for the 10 year / 100,000 mile Powertrain warranty since if you are not the original owner then it reverts to a 5 year / 60,000 mile Powertrain warranty for the next owner.

Of course the sales people assured me that you remain the original owner after a lease buyout. I searched for the answer to make sure, but I saw about an equal number of statements on both sides of the question.

Fortunately, the answer is pretty clear in the Hyundai Owner's Warranty Handbook. It states (on page 28):

"Original Owner is defined as the first retail purchaser of the vehicle who took delivery of the
vehicle on its date of first use. If the vehicle was first placed in service as a lease vehicle, and
the lessee purchases the vehicle at the end of the lease, the 10 years/100,000 miles Powertrain
Limited Warranty remains in effect."

2023 Hyundai Owner's Warranty Handbook

If you had the same question, I hope this helps answering it.

 

[acadapter]

@acadapter, thanks for getting this conversation started, confirming the math and helping others to get the same.

And, thanks @PineNut for posting this sheet. I’m in Colorado too and I think I am at the same point in getting my head around this. Your deal looks exactly like the information I’ve received. One dealer had IR Tint put on for $1295 and the clear bra for $699. They won’t take them off after they’ve been installed.

So, I’m going to try to negotiate the ACC down and make sure that $7,500 is taken off of their price. I’ve heard from one dealer that I can only buyout after 3 months, so I’ll have to call them out on that or just initiate buyout with HMF sooner anyways.

Do you know if we will have to pay taxes at buyout as well?

I've had a dealer play this game too on other cars. If they want to sell the car, they will. I can tell you that now that Limited trims are almost available right away, you have leverage. Additionally, I have also used the extended warranty/protection cancellation clause to my benefit as well.

All of them can be cancelled within a 30/45/60 day window (depending on which one) and legally they must include the information on cancellation in the contract paperwork. So, as an example, when the GV60 was only available in the first 5 states, I bought my GV60 from CT. They were MSRP plus two contracts. I took the Paint Protection and the Road Hazard warranty, included them in my loan, and cancelled them when I drove the car back to MD. The money was refunded entirely in 3 days. Lol.

 

[Neptune]

One concern I had with this lease/buyout approach was if the great Hyundai warranty remains in effect after a buyout. The Hyundai documents I saw said you must be the "original owner" so it came down to the exact definition of that term (with a lease, are you the original owner or is the leasing company the original owner?). This is especially important for the 10 year / 100,000 mile Powertrain warranty since if you are not the original owner then it reverts to a 5 year / 60,000 mile Powertrain warranty for the next owner.

Of course the sales people assured me that you remain the original owner after a lease buyout. I searched for the answer to make sure, but I saw about an equal number of statements on both sides of the question.

Fortunately, the answer is pretty clear in the Hyundai Owner's Warranty Handbook. It states (on page 28):

"Original Owner is defined as the first retail purchaser of the vehicle who took delivery of the
vehicle on its date of first use. If the vehicle was first placed in service as a lease vehicle, and
the lessee purchases the vehicle at the end of the lease, the 10 years/100,000 miles Powertrain
Limited Warranty remains in effect."

2023 Hyundai Owner's Warranty Handbook

If you had the same question, I hope this helps answering it.

Thanks, I didn't even think of that, I just assumed the warranty would be there. That would be messed up if we lost the warranty from a lease buy out.

 

[shdu73]

Does anyone know how the buyout and/or lease itself affects the lemon law on the vehicle? I've seen more lemon law related posts than I'd like ..

 

[Beyondthetech]

So I got my Limited for $0 out the door and a 48-month/10K lease for $845/mo. But I’m liking the car so much that I think I’d rather “own” it, so an 84-month financing would be under that monthly, considering that the dealership discounted the $7500 EV rebate off the price of the car.

I knew if I financed it straight away, I’d never get the $7500 tax credit, since I set myself up for a refund every year, now that the new rules state you have to owe taxes in order to get credited (unlike my solar panels which added a big deal to my last two tax returns).

As I’m reading previous posts, we’re pretty much done with the dealership after we drive away, so I can take the HMF buyout paperwork ($56615.24, including 6.625% taxes) and go to a credit union for a refi without any conditions?


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[parkville]

So I got my Limited for $0 out the door and a 48-month/10K lease for $845/mo. But I’m liking the car so much that I think I’d rather “own” it, so an 84-month financing would be under that monthly, considering that the dealership discounted the $7500 EV rebate off the price of the car.

I knew if I financed it straight away, I’d never get the $7500 tax credit, since I set myself up for a refund every year, now that the new rules state you have to owe taxes in order to get credited (unlike my solar panels which added a big deal to my last two tax returns).

As I’m reading previous posts, we’re pretty much done with the dealership after we drive away, so I can take the HMF buyout paperwork ($56615.24, including 6.625% taxes) and go to a credit union for a refi without any conditions?


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Yes. Plus you don't pay sales tax on EVs in NJ.

You're mistaken about the tax credit, but doesn't matter since you leased.

 

[ev4ev]

Yes. Plus you don't pay sales tax on EVs in NJ.

You're mistaken about the tax credit, but doesn't matter since you leased.

If you had $7500 tax liability, meaning you paid the government $7500 in Federal taxes, you would be refunded. This is not an issue right now because not US made cars are not eligible past august 2022 and you leased.

just because you get a refund does not mean you didn’t pay the government taxes.

 

[Beyondthetech]

Yes. Plus you don't pay sales tax on EVs in NJ.

You're mistaken about the tax credit, but doesn't matter since you leased.

It’s been confusing with the EV rebate and it’s recent changes. I could’ve sworn that I read that the rebate doesn’t add to your return, only lessens any tax burden you might have.

So the lease buyout paperwork from Hyundai Motor Finance is wrong and should not include tax?

Unpaid Lease Payments due through: 04/03/2023
Unpaid Late Fees: $0.0
Other Amounts Due: $0.0
Adjusted Unpaid Lease Balance: $52797.52
Sales Tax: $3497.84
Less: Security Deposit $0.0
Total Purchase Price: $56615.24
This quote will expire on 04/03/2023

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[Neptune]

It’s been confusing with the EV rebate and it’s recent changes. I could’ve sworn that I read that the rebate doesn’t add to your return, only lessens any tax burden you might have.

So the lease buyout paperwork from Hyundai Motor Finance is wrong and should not include tax?

Unpaid Lease Payments due through: 04/03/2023
Unpaid Late Fees: $0.0
Other Amounts Due: $0.0
Adjusted Unpaid Lease Balance: $52797.52
Sales Tax: $3497.84
Less: Security Deposit $0.0
Total Purchase Price: $56615.24
This quote will expire on 04/03/2023

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It's not a rebate, it's a tax credit. If you paid $7500 in taxes (via paycheck deductions throughout the year) then you'll get $7500 credited to your tax liability. So if you normally break even after filing taxes (you don't get a refund and you don't owe anything) then you'll get a check for $7500. I bought two eligible EVs last year, and I normally break even after filing, so I got $15k deposited into my bank account.

But as previously mentioned, this is irrelevant since the Ioniq5 doesn't qualify for the tax credit.

 

[Beyondthetech]

Apologies for the terminologies, I did mean to say tax credit. But what about the sales tax for the refi/buyout as a NJ resident?


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[Neptune]

Not sure about NJ but in MA you have to pay sales tax when you buy out the car, just like if you bought any car.

 

[LeFennecFox]

To clarify, the poster was referring to a special rule in New Jersey that exempts new, used, and lease purchases of zero emission vehicles from sales and use tax. Those of us who live in other states do not get this benefit. I do not know where everyone lives, but for those in NJ, see below:

https://www.state.nj.us/treasury/taxation/zevnotice.shtml

 

[voxel]

To clarify, the poster was referring to a special rule in New Jersey that exempts new, used, and lease purchases of zero emission vehicles from sales and use tax. Those of us who live in other states do not get this benefit. I do not know where everyone lives, but for those in NJ, see below:

https://www.state.nj.us/treasury/taxation/zevnotice.shtml

Yup. No sales tax on EVs in NJ.

Here in Florida... I have to buyout the lease via Hyundai dealer (not directly with HMF). I decided I would keep it a month before buying out my Limited.

Florida VW buyouts also need to go through a dealer. I think it is a state law related to the "title transferor on a lease-purchase to have a dealer license "

 

[gunsranger]

great news folks I got my lease buyout quote attached below and I live in SanFransico area and here is my breakdown..
Purchased : 2023 Ioniq 5 SEL
Downpayment: 18k
MonthlyPayment: 277.95

my HMF account took 2 days to create. Below is the final buyout quote with sales tax in it..
Total Price : 18,000+ 30394.29 = 48,394.29 ( includes sales tax, acquisition fee, lease buyout fee doc & registration fee)

So what are my next steps ? What's the best way to mail the check and what are the other documents I should be receiving to finish this process ?
And thanks @acadapter for your detailed help !!

 

[lore]

great news folks I got my lease buyout quote attached below and I live in SanFransico area and here is my breakdown..
Purchased : 2023 Ioniq 5 SEL
Downpayment: 18k
MonthlyPayment: 277.95

my HMF account took 2 days to create. Below is the final buyout quote with sales tax in it..
Total Price : 18,000+ 30394.29 = 48,394.29 ( includes sales tax, acquisition fee, lease buyout fee doc & registration fee)

View attachment 48924

OK - I have to ask. I'm also going to be buying in CA, so this is super interesting.

If I put a huge downpayment up front before I do the buy-out, my total purchase price will naturally be lower - and it looks like the Sales Tax will be much lower too! This is interesting since they probably baked the sales tax into the monthly payments assuming that you'll be paying that over 24-36-48 months... but if you buy out after a few days, they're never recovering that sales tax and you aren't paying it either! Am I missing something or is this a strategy that one could use to their advantage?

 

[voxel]

OK - I have to ask. I'm also going to be buying in CA, so this is super interesting.

If I put a huge downpayment up front before I do the buy-out, my total purchase price will naturally be lower - and it looks like the Sales Tax will be much lower too! This is interesting since they probably baked the sales tax into the monthly payments assuming that you'll be paying that over 24-36-48 months... but if you buy out after a few days, they're never recovering that sales tax and you aren't paying it either! Am I missing something or is this a strategy that one could use to their advantage?

With non single-pay leases (which Hyundai doesn't offer anyhow) there is no benefit to a large downpayment. If you total the car before buying it out... .kiss all that money goodbye.

Yes monthly payments are depreciation + rent charges + sales tax. There's a calculator for all this stuff.

CALCULATOR | LEASEHACKR

Leasehackr Calculator is the most powerful consumer research tool for car leases and car financing. It integrates lease, finance, and cash purchase programs for virtually all car models in the US and Canada.

leasehackr.com

For who intend to purely lease and return after 36 months - often prefer single-pay leases as that reduces MF (interest) and total costs - but again there are no one-pay Hyundai leases from what I gather.