Kia Lease Primer

The Kia lease primer is a one-stop all you need to know about leasing. Trying to decide whether to lease or buy? This is for you. You’re currently leasing a Kia and you’re nearing the lease end, this is for you. Often, people do not understand leasing. Leasing is nothing more than another form of financing.

Personal preference and lifestyle may dictate whether you lease or buy.  If you drive a lot of miles a lease is not a good choice. If you need a new car every couple of years, a lease may be worth considering.  How do you decide if leasing a car rather than purchasing one is the right choice for you?

Understanding Lease Terms

Leasing and buying offer two different ways to finance a vehicle.  Dealership finance managers and bank loan officers use standard lease and finance terms. Know before you go.

• Annual Percentage Rate (APR) – The amount of interest paid each year on a loan. Determined by credit history, down payment, and debt-to-income ratio. On a lease, this is called a money factor.
• Co-signer – Buyers with poor credit or first-time buyers with no credit history may be required to have a cosigner. A co-signer applies for the loan with you and agrees to pay off the debt if you do not make payments.
• Default – Failing to make payments based on loan agreement terms. When this occurs, dealers repossess the vehicle.
• Equity – The vehicle value that you own. If the car is worth more than you owe, you have positive equity. If you owe more than the car is worth, you are considered “upside down” due to negative equity.
• Lessee – A person who has signed a lease for a vehicle for a specific period.
• Principal – The amount of money borrowed to purchase a vehicle before interest is added.
• Term – The length of time that a borrower makes payments on a loan.

Before you buy or lease determine how much you can afford, know your credit score, and shop for the best financing deal. Our finance team works with dozens of lenders and will help you find the best rate and terms. Kia Motors Finance sometimes has special financing offers for customers with good credit. Lease financing is offered through Kia Motor Finance. Very few other banks will offer a lease program. Kia’s lease rate is typically and historically competitive with other available leases. There may be tax advantages to leasing for business customers. We advise checking with your accountant before buying.

Visit our Monthly Specials page to see both purchase and lease offers on our top models.  Call us with any questions or come to the dealership and speak with one of our product or finance team members.

Benefits of Leasing 

• Buy more for your money at a lower monthly payment.
• The initial down payment is usually lower than with traditional financing.
• A vehicle’s value at lease-end is predetermined and protects you against devaluation.
• The monthly payment is based on the difference between the car’s price and what it’s expected to be worth at the end of the lease, which is known as the car’s lease-end value.
• The average lease term is three years, so you drive a car under full warranty.
• Buying a new car every few years means driving with the latest safety features and technologies.
• Leasing offers more flexibility in terms of ownership choices at the end of the term than traditional financing.

If the stated future value is less than the actual value at the completion of the lease term you can still trade and take advantage of any available equity. If not, walk away from the vehicle and the lender assumes ownership of the loss in equity. You may also purchase the car for the lease-end value.

On the other hand, leasing limits, the number of miles you can drive per year, are generally 10-15,000 and you will pay a fee per mile for each driven over the limit specified in your lease agreement. You are essentially in partnership with the lender. Since you don’t pay on the future value of the car, if you pay to the completion of the term, you still don’t own the vehicle outright. If you choose to return the vehicle to the lender at termination, it must be in good condition with only the wear and tear expected of a three-year-old car. Any out-of-the-ordinary wear or damage may be charged to you. You will also need a good credit score to be approved for a lease.

You may be better with traditional financing if you are the type of individual who likes to keep a car for a long time, add personal customization accessories, and do not want to be concerned with mileage restrictions.

Kia Country’s Lease-End Overview is designed to simplify the lease-end process and help you make an informed decision that best suits your needs. Kia Motors will mail you a Lease-End Kit four months prior to your contract maturity date. You will also receive email reminders that your lease contract is about to expire.

Our goal is to overview will provide you with the resources and information you need to:

• Buy a new Kia or keep your leased vehicle.
• A simple to-do list to follow if you choose to turn in your vehicle.
• A Self-Assessment tool to help you identify potential excess wear and use charges

The Lease-End

Kia Country’s Lease Specialists can help you acquire the information you need to decide between driving off in a new Kia or buying your leased vehicle. Browse our current models so you can see what new features and technologies are available. Our team can help you with more in-depth information, pricing, financing options, and securing your Loyalty Rewards.

What to Do if You Decide to Turn in Your Leased Vehicle

• Identify potential excess wear and tear using Kia’s Self-Assessment tool.
• Make any necessary repairs to avoid excess wear and use charges.
• Get specific details on your options by talking to one of our Lease-End Advisors.
• Schedule a Turn-In Appointment

What to Do if You Decide to Buy Your Leased Vehicle

It is a simple process to buy your lease. The purchase price for your vehicle was pre-determined at lease signing and can be found in your agreement under “Purchase Option at End of Lease Term.” If you require financing, our team can assist you in securing a loan.

Additional Considerations

Some buyers think that leasing is renting. This is untrue. A vehicle’s MSRP is x. The residual value is y. At the end of the lease, you can buy it for y, which dispels the notion that you are paying for nothing. Leasing also provides a hedge against market instability. Currently used car prices are declining, but with a lease, the lease-end value is pre-determined making market fluctuations irrelevant.

Currently, most Lessees have positive equity in relation to their lease-end value. Since the beginning of the COVID era, the lack of new and used car inventory has elevated used values and proven advantageous to customers.  In addition, most manufacturers will only let you “trade” or sell your leased vehicle back to the type of dealer who offers the brand of car you drive. For example, if you lease a Ford, you can only trade it or sell it back to a Ford dealer.  This is not intended to protect you but to help the manufacturer. Inadvertently, this rule is helping to drive values up and create an equity situation for you. This situation will not last forever, but likely will continue for a few years. Take advantage of the opportunity now.

More questions? Talk to one of our Product & Technology Specialists or complete the form below.