$7500 back on a lease??

[G650]

What does everybody think of this.

Electric car-makers have found a legal loophole to get their customers an extra $7,500 tax credit

Requirements for the new EV tax credits mean a lot of EVs won't qualify. Automakers may look to get their customers a commercial EV credit instead.

www.businessinsider.com

Is anybody doing it?

 

[SaratogaLefty]

I was told it is $4k for the GV60 Performance and $1k for the Advanced. Money factor is horrible.

 

[voxel]

What does everybody think of this.

Electric car-makers have found a legal loophole to get their customers an extra $7,500 tax credit

Requirements for the new EV tax credits mean a lot of EVs won't qualify. Automakers may look to get their customers a commercial EV credit instead.

www.businessinsider.com

Is anybody doing it?

I don’t think Genesis is passing through the credit. Hyundai is with the Ioniq 5 and Kona but Kia is not. Read up on the 45W loophole. The financial institution needs to pass through the savings and some don’t. BMW isn’t for the the i4 higher trims nor the iX M60. Ford and Tesla are not passing it through at all.

 

[Starflyer]

I was told it is $4k for the GV60 Performance and $1k for the Advanced. Money factor is horrible.

Money factor is horrible. <- what do you mean by this? Not the whole $7500?

 

[G650]

So I put the same question out on the EV6 site. (I own one) and a guy responded from the i5 site with this......

To the question for is anyone doing this: Hell yeah. I just did it for the i5. It's completely legit and Hyundai/Kia are just catching up to what VW, BMW, and a few others have discovered. It boils down to, as a lease, the Corp/Business was always eligible for the credit since the IRA requirements don't apply to those transactions. Now, they are passing it through to the customer in order to remain competitive with the brands that are currently eligible.

I detailed the entire process in the Ioniq 5 thread here and my immediate buyout quote is post #115:

Ioniq 5 $7500 Lease Cash

To the comment about dealers wouldn't hold up their end - the answer is, dealers don't really know anything and they don't control anything associated with Hyundai Motor Finance Leases (or any other brands). The dealers are cashier's, and in my experience the dealer didn't even know about the section in the contract associated with Early Purchases.

I went in the day this became available (2/18) got the contract drafted and asked about the early purchase section. The dealer was unaware how it worked so I asked for time to read it while I waited for my down payment check. I read the entire contract, confirmed with a call to HMF Buyout Supervisory Office, signed and drove away on 03/04, executed buyout process in 03/09.


He even did one more thing which is to do an early buy out after the lease. So he got the $7500 and bought not leased the car in the end!

 

[SaratogaLefty]

Money factor is horrible. <- what do you mean by this? Not the whole $7500?

Money factor has nothing to do with the rebate. Money factor is the interest charged ("rent charge").

 

[Starflyer]

Money factor has nothing to do with the rebate. Money factor is the interest charged ("rent charge").

OK, I've never leased a car and never heard of "money factor".

 

[SaratogaLefty]

I don't have all the exact details yet but will soon. Most likely leasing won't make sense unless you can write if off to a business or you simply are willing to pay for the option to give the car back after three years (or whatever lease term you choose). There are four key factors in any car lease: 1) The "Cap Cost" - This is the negotiated price of the car, most often MSRP but could be lower or higher depending on your negotiating skill 2) The "Money Factor" - This is the interest rate used by the leasing company over the life of the lease. I'm not exactly sure what Hyundai/Genesis is using right now but probably somewhere around 6% APR but the "Money Factor they tell you is in a different format. You can usually (but not always) avoid some interest by pre-paying the entire lease up front. 3) The "Residual" - This is the price you will pay if you decide to purchase the car at the end of the lease. To obtain minimum lease payments you want the highest residual value. 4) Your annual mileage you commit to at time of inception for the lease. The lower the annual mileage the higher the residual should be.
Your lease payments will be determined by the difference between the Cap Cost and the Residual with the interest added onto the payments plus taxes. There is also an "Acquisition Fee" which is usually somewhere around $750-$1000 that is charged at the inception of the lease. So the "rebate" they are offering (I believe this is $1000 for the GV60 Advanced and $4000 for the Performance) should more than offset the Acquisition Fee.

 

[Nameneeded]

OK, I've never leased a car and never heard of "money factor".

Money factor is just a different way to list/ present the interest rate in finance contracts. You multiply it by 2400 to get the interest rate. I always viewed it as a scammy way to hide an interest rate from unsuspecting rubes. Some places use a 'money factor' formula to calculate the lease structure as well. A typical formula used to calculate the lease money factor is Money Factor = Lease Charge / (Capitalized Cost + Residual Value) x Lease Term.

As for the rebate stuff. I can see dealerships looking to take advantage. There will be many that just scoop the rebate for themselves.

I imagine thier primary loophole will be dealer in-house lease agreements (the dealerships hold the lease and is a co-owner with the driver.) If I was unscrupulous and looking to do this I would use a portion of the rebate to buy down an interest rate to make it an attractive option and convert people to in-house leases over factory offerings. Then scoop the rebates as the company.

The entire program is an example of how the government wants to look like they want people to drive EV's but really they are not supporting anyone but companies.

 

[G650]

I don't have all the exact details yet but will soon. Most likely leasing won't make sense unless you can write if off to a business or you simply are willing to pay for the option to give the car back after three years (or whatever lease term you choose). There are four key factors in any car lease: 1) The "Cap Cost" - This is the negotiated price of the car, most often MSRP but could be lower or higher depending on your negotiating skill 2) The "Money Factor" - This is the interest rate used by the leasing company over the life of the lease. I'm not exactly sure what Hyundai/Genesis is using right now but probably somewhere around 6% APR but the "Money Factor they tell you is in a different format. You can usually (but not always) avoid some interest by pre-paying the entire lease up front. 3) The "Residual" - This is the price you will pay if you decide to purchase the car at the end of the lease. To obtain minimum lease payments you want the highest residual value. 4) Your annual mileage you commit to at time of inception for the lease. The lower the annual mileage the higher the residual should be.
Your lease payments will be determined by the difference between the Cap Cost and the Residual with the interest added onto the payments plus taxes. There is also an "Acquisition Fee" which is usually somewhere around $750-$1000 that is charged at the inception of the lease. So the "rebate" they are offering (I believe this is $1000 for the GV60 Advanced and $4000 for the Performance) should more than offset the Acquisition Fee.

So I am not sure you read my #4 post above. It was copied off of the Ioniq 5 forum site. What they were saying is to lease the car get the $7500 and then after the first payment do an early buyout of the lease and own the car. You loose a little in fees but get the $7500 up front and don't have to go through the whole lease. If you read the whole thread the one guy already did it. The only thing is not everybody is doing it. Or are saying they are doing.

______________________________

Help support this site so it can continue supporting you!

 

[SaratogaLefty]

So I am not sure you read my #4 post above. It was copied off of the Ioniq 5 forum site. What they were saying is to lease the car get the $7500 and then after the first payment do an early buyout of the lease and own the car. You loose a little in fees but get the $7500 up front and don't have to go through the whole lease. If you read the whole thread the one guy already did it. The only thing is not everybody is doing it. Or are saying they are doing.

Yeah I did read it. Here is what I'm trying to find out. Assuming you do a 36 month lease, I was told you pay the first month's lease charge up front. Then the person I was talking to said you then do the buyout from the lease and you own the car. The question is if you go that route and do the buyout say in place of the second month's lease payment, do you still have to pay all the 36 months of interest? If so than no advantage to doing the buyout as you lose the option to give the car back at the end of the lease. If in fact you can avoid having to pay any interest except for the first month of the lease, then that would be a good deal. So just need some clarification on how much interest you would wind up paying.

 

[G650]

Yeah I did read it. Here is what I'm trying to find out. Assuming you do a 36 month lease, I was told you pay the first month's lease charge up front. Then the person I was talking to said you then do the buyout from the lease and you own the car. The question is if you go that route and do the buyout say in place of the second month's lease payment, do you still have to pay all the 36 months of interest? If so than no advantage to doing the buyout as you lose the option to give the car back at the end of the lease. If in fact you can avoid having to pay any interest except for the first month of the lease, then that would be a good deal. So just need some clarification on how much interest you would wind up paying.

Right that I think is what everybody is saying. I can't explain it very good but if you go to the #115 post on that site he goes into detail that he did just that. Early buyout without all the interest.
Having said all that it doesn't matter if they don't do the $7500 offer up front. From looking at all the different forums only a few do it and then the ones that do it are only doing on certain models. (BMW, Hyundai, VW.....) If I could do it on a Genesis I would do in a heartbeat. I bought an EV6 early and just got my $7500 tax credit back 2 weeks ago.

 

[Nameneeded]

Should be the same in the US but here in Canada you can ask for a lease payout amount at anytime and it will be the total amount to payout the car making it yours.

Many dealerships have fees for processing this so ask first.

Now here is the tricky part.... some lease agreements require the payments be made including interest cost! Hence you can't make extra payments on a lease to reduce interest costs.

So lets say you get a 24month lease. After the first payment you have 23 payments of say $600+tax. Rather than show you the principal amount owing like on a loan they will take your remaining payments (23x600) plus the lease end value/ buyout plus tax.

Here's some math.

Vehicle cost $80000
Interest rate: 6%
LEV: $40000
24month term
The total interest cost would be about $7000.

 

[SaratogaLefty]

I'd like to know exactly what the current Money Factor is and also the residual for a 36 month lease on the Advanced and the Performance assuming 7500 miles per year. Anybody here have access to that data?

 

[SaratogaLefty]

Should be the same in the US but here in Canada you can ask for a lease payout amount at anytime and it will be the total amount to payout the car making it yours.

Many dealerships have fees for processing this so ask first.

Now here is the tricky part.... most lease agreements require the payments be made including interest cost! Hence you can't make extra payments on a lease to reduce interest costs.

So lets say you get a 24month lease. After the first payment you have 23 payments of say $600+tax. Rather than show you the principal amount owing like on a loan they will take your remaining payments (23x600) plus the lease end value/ buyout plus tax.

Here's some math.

Vehicle cost $80000
Interest rate: 6%
LEV: $40000
24month term
The total interest cost would be about $7000.

Shouldn't the total interest in your example be $2400? 6% of $40,000??

 

[Nameneeded]

Shouldn't the total interest in your example be $2400? 6% of $40,000??

Not on a lease. You pay interest on the amount being borrowed. That's the 2 years on teh entire cap cost amount.

Also it's 6% per year. So rough numbers, first year $4000, second year $3200.

 

[voxel]

Genesis is now offering $7500 cap reduction on GV60 leases like Hyundai has on the Ioniq 5 and Kona electric.

 

[pippa]

for the benefit of the slow witted (namely, me):

for someone who could afford to pay for the car outright...and who does have a business to use for the lease...would that person be better off writing a check for the car or taking advantage of the loophole?

tldr, which option has a lower total cost for the car?

 

[Trixie86]

for the benefit of the slow witted (namely, me):

for someone who could afford to pay for the car outright...and who does have a business to use for the lease...would that person be better off writing a check for the car or taking advantage of the loophole?

tldr, which option has a lower total cost for the car?

Not a lease guy, but couldn't you just take the lease $ and then buy car after a few months or are you locked in for 3 years?

 

[voxel]

tldr, which option has a lower total cost for the car?

Lease and buyout. Recent Ioniq 5 owners (like me) have saved $6500 over straight purchasing.

The problem is some states do not make leases viable due to double taxation (I think TX and NY) so in those states the 45W loophole is almost no real savings.