How it works: Kia Retail Advantage Financing

Following in the footsteps of sister company Hyundai, Kia is launching a new lease-like financing option on all new electric and plug-in hybrid vehicles. It’s called Kia Retail Advantage, a balloon finance option with some great benefits to know about if you’re unsure whether to buy or lease. Here’s an overview of what Kia Retail Advantage is, how it works and whether it’s a good deal or not.

How does Kia Retail Advantage work? Kia Retail Advantage is a type of financing balloon and is available as a payment option when financing a car through Kia Motors Finance (KMF), the captive lender. This program is a kind of mix, with elements of leasing and traditional purchases. Kia Retail Advantage offers four different resolutions once the payment term of 36, 48 or 60 months has passed.

These resolutions include:

  • Refund the lump sum payment in one transaction and keep the vehicle
  • Keep the vehicle and refinance the lump sum payment with KMF ($250 refinance fee applies in some states)
  • Trade in or sell the vehicle for the purchase price at the end of the term and use any equity for the down payment on a new car
  • Return the vehicle to KMF in good condition and drive away (up to $400 disposal fee applies)

Which models are eligible for Kia Retail Advantage? At this time, only new Kia EVs and PHEVs with less than 1,000 miles and untitled demonstrator and service vehicles with up to 6,000 miles are eligible. Unfortunately, traditional hybrids are not eligible.

Also, this program is not available in all 50 states. Kia Retail Advantage is available in all states except the following: District of Columbia, Maine, Maryland, New Hampshire, Nevada, North Carolina, Washington and West Virginia.

What are the benefits of Kia Retail Advantage? The biggest benefit for most buyers might be the ability to take advantage of a $7,500 federal tax refund and driver’s allowance flexibility. Currently, only annual allowances of 12,000 and 15,000 miles are available while the industry standard is now around 10,000 miles.

Kia Retail Advantage could also be a good deal for other reasons. Consumers with a credit score of 620 and above are eligible to participate in this program, and even better, returning customers can get a 2-tier rate improvement on their credit score as a loyalty incentive.

Additionally, promotional leases are not yet available on some of the newer EVs such as the 2022 Kia EV6, so financing this way gets you as close to a lease as possible.

What are the disadvantages of Kia Retail Advantage? If you decide to keep your car, the final lump sum payment must be paid in one large lump sum payment. This could mean that you will have to refinance your loan with KMF.

While not a deal breaker for some, it’s worth noting that in addition to affecting your credit rating, you’ll likely have to pay the $250 refinance fee. Ultimately, the choice will depend on your priorities.

For reference, Kia’s estimated final lump sum payment on a 2022 EV6 — based on MSRP with destination — is over $18,000. This assumes $0 down payment and a rate of 4.3% APR for a term of 60 months with an annual driver’s allowance of 12,000 miles.

Alternatively, the same EV6 with a term of 36 months and the same annual driving allowance of 12,000 miles will have an estimated lump sum payment of just over $25,000, assuming a down payment of $0 and an APR of 4.21 %.

That said, the highly anticipated EV6 arrived last month to already huge margins amid a shortage of inventory. These markups may be unavoidable, so these final lump sum payments could be significantly higher.

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