Lease with immediate buyout?

[dcmackintosh]

We've put $500 down on a G2 R1S Dual Large, with pick up in Portland in about three weeks. We could purchase outright, but a friend recommended that we lease to get the $7,500 incentive, then buy it off right away. We would need to pay the $895 acquisition fee and $495 disposition fee, but that still puts us $6,100 ahead (assuming we would not otherwise qualify for a tax rebate). I've been told that others have done this, but when we got a call back from a Rivian Guide (or someone) today, he said that you could not buy out your lease immediately. I did not find a way to talk to anyone at Chase, without already having an account with them. Have others done this successfully? Anything I'm missing? How can we confirm?

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[akc5247]

I believe you need to wait at least 30 days before you buy out. Don't see why not after that time period though.

I started my lease beginning of this year and had the same plan.

The 30 days again, is entirely based on time it actually takes for Chase to recognize there is a new lease etc etc and shows up as part of your account. For me it took almost 5 weeks after I got the vehicle for the lease to show up as part of my Chase accounts (and after multiple phone calls to Chase telling them I already had the vehicle but there was no paperwork from them).

 

[ndmiller]

Your plan can't really pencil out in a positive financial way compared to just paying the lease and buying out at the end.

You loose a lot in potential interest on the cash outlay gained during 36 months at these high interest rates....enough to easily offset the 7500 lease incentive.

You'd have to pay

• all remaining payments including taxes
• the residual value of the vehicle
• any early termination or other fee's
• The original deal down payment

Just thinking about

• taxes on 36 payments of 700-800 that's another $1500-$2000
• the money factor on the payments
• the cash outlay ~$80K-$100K that could earn 5% annually as a lost income (at least 6K lost)

BUT, if it makes you feel good, have a it, it's your money.

 

[DuoRivians]

You should be able to buy it out after the first month. Just wait for the lease to settle.

 

[dcmackintosh]

Your plan can't really pencil out in a positive financial way compared to just paying the lease and buying out at the end.

You loose a lot in potential interest on the cash outlay gained during 36 months at these high interest rates....enough to easily offset the 7500 lease incentive.

You'd have to pay

• all remaining payments including taxes
• the residual value of the vehicle
• any early termination or other fee's
• The original deal down payment

Just thinking about

• taxes on 36 payments of 700-800 that's another $1500-$2000
• the money factor on the payments
• the cash outlay ~$80K-$100K that could earn 5% annually as a lost income (at least 6K lost)

BUT, if it makes you feel good, have a it, it's your money.

Thanks for your reply. I'm not familiar with leasing, so trying to determine if there are costs we lose, other than the acquisition and disposition fees ($1,400 total). Normally, we have paid cash, unless there's a crazy low finance rate (like 0% on our 2017 e-Golf, which I'm still driving six years later).

We don't pay sales tax here in Oregon.

Don't you just pay the money factor on payments as you're making them? It's basically an interest rate, right? If we're ending the loan (lease) by paying off the principal, do we really pay additional interest on payments that we're not making?

There is a disposition fee, but aren't early termination fees for a car that's turned in early?

Yes, we could probably earn more investing that money than buying a car outright, depending on the lease money factor or loan interest rate.

 

[ndmiller]

Thanks for your reply. I'm not familiar with leasing, so trying to determine if there are costs we lose, other than the acquisition and disposition fees ($1,400 total). Normally, we have paid cash, unless there's a crazy low finance rate (like 0% on our 2017 e-Golf, which I'm still driving six years later).

We don't pay sales tax here in Oregon.

Don't you just pay the money factor on payments as you're making them? It's basically an interest rate, right? If we're ending the loan (lease) by paying off the principal, do we really pay additional interest on payments that we're not making?

There is a disposition fee, but aren't early termination fees for a car that's turned in early?

Yes, we could probably earn more investing that money than buying a car outright, depending on the lease money factor or loan interest rate.

It's not a loan you're paying off on a lease. it's the use and depreciation for the lease term to the owner...the bank (I think chase?). You'll still have to pay each and every payment with no discount if you do it at the beginning (i.e. $785 * 36 if term is 36 months). You don't save any interest like paying a loan off early with a lease.

Do the math, payments * term + initial acquisition fees + end of lease fees + residual @ end of lease and you'll see the total. It's definitely more than buying the vehicle outright, but how much depends on your actual lease language.

Forgot, you may have to pay a fee to have the vehicle retitled from the Bank to you as well, depending on your state.

 

[jfoonly]

For me, my first payment was posted exactly 1 week after delivery and my lease showed up on chase website during the 2nd week. At that point you can request a payoff amount and invoice documentation. They were quite slow, I had to call and send a message on the website, then eventually call daily.

Whether the numbers work depends on your rent charge. Mine was pretty high, ~$250 for an R1S. It would have been close to just break even to build a quarterly Treasury ladder.

There were no early termination or other fees, just what I owed (capital depreciation + residual, no total rent charges), so I did save some money vs outright purchase. But fees may have changed, get your payoff invoice to see.

 

[jjswan33]

To anyone saying you have to pay each and every payment you are wrong... flat out. If you think you are right post all terms and conditions here for your lease to prove otherwise. I don't care if customer service at Rivian told you that.

You can buy out your lease after 3 months. If you buy it out before 3 months it reverts to a purchase and they could claw back the tax credit.

To pay off the lease you will have to pay the remaining portion of the capitalized costs (ie depreciation) and the residual. Any remaining rent payments will not have to be paid.

Others have done what you are proposing and posted that here, I did the same with an Ioniq 5 lease earlier this year. Tax situations will vary state to state

 

[ndmiller]

To pay off the lease you will have to pay the remaining portion of the capitalized costs (ie depreciation) and the residual. Any remaining rent payments will not have to be paid.

Complete nonsense you are describing a ballon payment loan buyout. OP DO NOT BELIEVE THIS.

No bank is going to lease you a vehicle (they purchase) and have you buy it from them for their costs. That's not how banks make money on leases. Either you give them the lease terms money over time or all at once. The amount of money owed doesn't change with the exception of any fees incured for your choice.

 

[jjswan33]

Complete nonsense you are describing a ballon payment loan buyout. OP DO NOT BELIEVE THIS.

No bank is going to lease you a vehicle (they purchase) and have you buy it from them for their costs. That's not how banks make money on leases. Either you give them the lease terms money over time or all at once. The amount of money owed doesn't change with the exception of any fees incured for your choice.

You clearly have no idea what you are talking about or didn't understand what I said.

Leases are very simple. You have a rent charge that is equally divided by every payment (your paying interest every month). You don't have to pay interest any longer than you have an outstanding balance. There is no nonsense there at all.

I literally just did this like I said. FACTS. I paid 3 months worth of rent charges and not a penny more and I owned the car got the title in the mail a month later.

So MSRP was around $60k then 7500 tax credit allowance then TTL of about $1k, $3k down payment. My payoff (residual plus cap costs) was ~$51k after 3 months worth of payments. So total I paid $51k + 2100 (3 monthly payments) + $3k down or ~$56k of which around $1200 was from 3 months worth of rent payments.

Edit: And to your point I think the bank did fine. several months worth of rent charges plus the acquisition fee they charge amounted to ~$2k.

 

[jfoonly]

Complete nonsense you are describing a ballon payment loan buyout. OP DO NOT BELIEVE THIS.

A lease is not a loan. OP or anyone actually in a lease can and should request their payoff terms. There is no obligation to actually payoff, but you have to have an active lease to get the numbers. For me and others, there were no early termination fees and no payments of uncollected rent charges. YKWHMV

 

[lefkonj]

I highly doubt this is financially beneficial. If you have the cash just buy it. Like others have said there is more to buying out a lease than just paying for the vehicles sticker price.

 

[Ngkgb]

Complete nonsense you are describing a ballon payment loan buyout. OP DO NOT BELIEVE THIS.

No bank is going to lease you a vehicle (they purchase) and have you buy it from them for their costs. That's not how banks make money on leases. Either you give them the lease terms money over time or all at once. The amount of money owed doesn't change with the exception of any fees incured for your choice.

He is absolutely correct: RENT( ie interest) payments will not have to be paid back.

 

[DuoRivians]

Complete nonsense you are describing a ballon payment loan buyout. OP DO NOT BELIEVE THIS.

No bank is going to lease you a vehicle (they purchase) and have you buy it from them for their costs. That's not how banks make money on leases. Either you give them the lease terms money over time or all at once. The amount of money owed doesn't change with the exception of any fees incured for your choice.

You’re definitely wrong on this. Chase will not charge you the subsequent lease rent charges if you buy out your lease.

 

[DuoRivians]

I highly doubt this is financially beneficial. If you have the cash just buy it. Like others have said there is more to buying out a lease than just paying for the vehicles sticker price.

Not really, if you can buy the car, it is still advantageous to take the lease credit and buy out the car. Effectively a $7500 discount on msrp

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