Niro EV Lease to Buy

Discussion in 'Kia Niro' started by who.EV, Feb 27, 2020.

  1. who.EV

    who.EV New Member

    Background.
    We 2-year leased a Kia Forte because I place a reservation for my Model 3. Tesla ended up actually delivering my car 7 months after I placed my reservation. I picked up my car July 2018 and still had 17 months left on my Forte lease. It was an impulse buy on my part and when I started looking at other EVs after 6 months of Tesla owernship, the Niro EV caught my eye from all the European reviews.

    6 months left on the Forte lease, Kia contacted me to start looking at options to retain us as a customer. I told them I was only interested in the Niro EV, but supposedly they weren't planning to sell those at the Kia West Covina location. Later that week, they somehow got a Niro EV EX on hand.

    That being said.
    That being said, I convinced my wife to buy the Niro EV EX standard because she was in a market to replace her 2013 Prius and her employer offers free charging for their employees. Neither of us are experienced in buying cars and we ended up with a Niro EV lease at 44k after tax at $649USD/month for 3 years.

    There's things I want to DIY to the car- replace the emblems with the Korean Kia logo, ceramic coat, replace the lights, homelink/autodim mirror, powerlift gate... but of course I shouldn't consider those things unless we bought out the car. She preferred the premium, but as I implied earlier, they don't have plans to regularly carry BEVs.

    We supposedly got 11000 off (not sure if that included rebates we hadn't applied for yet) but included the 7500 tax credit if we had bought the car. Obviously we could've done a lot of things better, just inexperienced and lack of available guidance with purchasing cars. Does anyone have any sage advice what to do from here? I'd like to get a good deal for my wife, but I'm unsure how to go about it when we request the buyout.
     
  2. Robert Lewis

    Robert Lewis Member

    I'm not really sure how to help you after the fact. If the deal weren't already done, I would have encouraged you to shop around. I live in the area, and shopped Kia in Covina on Citrus - they weren't willing to budge on price at all. I also shopped several other Kia dealers as far away as Glendale. I finally ended up at Kia Pomona, and got the EV EX Premium for $42,500 plus tax/license. That factored out to $749/mo for 60 months at 1.9% APR ($4,500 trade in as a down payment). On top of that, I still get the $7,500 fed tax credit, the $2,500 CA rebate and the $1,000 SCE rebate.

    By the way, great to hear there's another Niro EV in the area. I've literally been actively looking out for another one for 8 months, and haven't seen a single one yet out in the wild! As you're thinking about customizing, I'd be happy to show you what I've done to mine for ideas. I live in San Dimas. If you're shopping the West Covina Kia, I assume you're somewhat nearby.
     
    Last edited: Feb 27, 2020
  3. ITown

    ITown Member

    A suggestion for future car buying - when you're given a quote for a monthly lease payment, take that monthly payment and multiply by the number of months. For example, $649 x 36 = $23,364. That is your total cost over the course of your lease.

    I was given a very similar lease offer. I ended up choosing to purchase rather than lease because I calculated the following:
    $38,000 sales price + 10% sales tax = ~ $42,000 to buy the car.

    $42,000 - $7,500 (tax credit) - $23,364 (3 year lease cost) = $11,136 residual value

    In other words, in order to feel that buying is a better deal than leasing, I needed to anticipate a residual value of $12,000 or more on the car at the end of the lease.

    My personal expectation is that the car will have a residual value which is comparable to the Chevy Bolt, or perhaps a bit better. So, I'm expecting a residual value of $20,000 - $25,000 after 3 years.
     
  4. who.EV

    who.EV New Member

    Thanks for the input.

    @ Robert Lewis, it was the Kia off Citrus lol. You're right, I remember they wouldn't budge. Since I leased my car there and they were going to wave fees, we more prone to get the Niro EV there. I agree with you on being the Niro EV in the area!

    @ITown, thanks for your suggestion! We just got back from Kia after talking to a sales and finance rep. Looking at the the finance gal pointed out:

    We take the agreed upon value 41,000.00 and subtract the 8,300.00 rebates/noncash credit (basically the dealer passing on forward the federal tax credit that they will be benefiting from), which should be 32,700.00 right?

    But when we look at our total monthly payments + residual value (23,052.96 + 19,465.25) that equals 42,518.21‬. So I'm just baffled as to where the $8,300 played a part in the monthly payments. So we're still confused. What an expensive lesson.
     
  5. Robert Lewis

    Robert Lewis Member

    Is sales tax, interest on the lease payments, licensing, destination charge, etc. all factored into the $41,000? Was there any remaining liability on your previous lease (assuming you turned it in as part of the transaction) factored into the new payment structure? Those could account for that difference you're seeing.
     
  6. This is a careful and valid analysis, however does include one assumption: that the car ownership span will be three years, just like the lease. If you sell your car every three years and replace, it makes sense. If not, this becomes more complicated.
     
  7. ITown

    ITown Member

    I'd love to hear more about your perspective here to understand better. Let me know if the following addresses your thoughts:

    To further elaborate, my 3-year calculation is based on coming up with the equivalent to a 3-year lease (which is what Kia offers for the Niro EV).

    If you want to hold your car for only 2 years, then a lease would be 50% more expensive because you'll still be on the hook for all 3 years of lease payments but only get 2 years of value from the lease.

    If you want to hold your car for 6 years, then you'd still want to use my calculation to assess whether the buyout option is more attractive than purchasing the car outright.

    I think the general consensus is that leasing is a better option if you want to change cars every 3 years. However, I'd suggest that it still depends on the 3-year cost.

    Some advantages for leasing which I haven't covered previously:
    1. If you want to sell your car, you have to choose between getting your car's residual value by selling on Craigslist, or selling to a dealership/used car lot and getting less than the residual value for your car (less effort). With leasing, you don't have to deal with this at all.
    2. If you have scratches and marks on your car, or wear on your tires, there's no need to make the car look perfect if it's on a lease, whereas you may want those dealt with if you're selling your car yourself.
    3. Almost no paperwork when returning the car if you lease.
     
  8. If I keep my car for six years, how it's value at 3 years at all meaningful? Perhaps the cost of 2 three year leases in series could be compared to 6 years of ownership. What about 5 years of ownership?
     
  9. ITown

    ITown Member

    The value after 3 years tells you whether or not the buy-out option on the lease makes financial sense.
     
  10. who.EV

    who.EV New Member

    Sales tax... charge, etc were not all factored in the $41,000 number which is how I came to 44k @ $649USD/month for 3 years numbers. Looking at the previous paperwork it said we got credit but I have conflicted understanding in that we had to pay the remaining balance. Even then it would be less than $1000 for an early release from the Forte lease. I recall I said what's the point of returning the car at all if we're not getting credit for it. I really wish I had done a better job for my wife. Either way with the dealer's credit for the federal tax benefit plus other incentives ($8300.00 credit/rebate), I still feel like the buyout price should be under $40,000.

    I did try to put together a cost per mile for my wife's Prius ownership vs returning this car. 6 years original ownership of the Prius she ended up paying about 31 cents per mile for everything she paid for (average gas cost, maintenance, etc) before residual value since she passed over the car to her parents. For this at the numbers we see now with the applicable $3500 worth of rebates, it's about .75 cents per mile if she uses the full 30,000 miles and she has no maintenance, then it's .20 cents for each additional mile.

    If anyone has another way to look at it, please share. Otherwise thanks for your guy's feedback. I'm not even sure if it's worth scheduling time with their Finance people to understand where the credit/rebate was applied. I think for the time being we're just going to return it at the end of term, so there goes those upgrades.
     

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