Kia’s disposition fee was “100000 percent glossed over”

By | June 18th, 2016

Elizabeth Traynor is upset that after turning in her leased 2013 Kia Optima to the dealership in West Nyack, NY, she received a bill in the mail for $400.

Traynor’s been hit with the infamous “lease disposition fee,” which, according to Edmunds, can range from $300 to $400, and is due at lease end if you don’t buy the car. The fee represents the cost for the leasing company to take the car back into its inventory, clean it up and get it ready to sell again. Think of it as a restocking fee.

Leasing has become an increasingly popular way to finance cars among Americans, but the terms of the deal can be tricky. The idea of getting a new car every few years, coupled with a lower monthly payment, is enticing. But there are a few catches. And the disposition fee is one of them.

Traynor complains that the fee was “100000 percent glossed over,” and that may be true. After all, there’s a lot of glossing over that happens in the finance office of car dealerships.

Unfortunately for Traynor, now that she has turned in her vehicle, she’s going to have to pay the fee. She admits she is sure that the fee was disclosed, but not explained.

I’m also sure the fee was disclosed, because it has to be under Federal law. The Federal Consumer Leasing Act, an amendment of the Truth In Lending Act, “requires that certain lease costs and terms be disclosed, imposes limitations on the size of penalties for delinquency or default and on the size of residual liabilities, and requires certain disclosures in lease advertising.” The disposition fee falls into this category.

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Traynor calls the disposition fee a “junk fee,” which I love because she’s speaking our language. And because she’s right. If the fee represented any real cost to Kia, they wouldn’t waive it for repeat customers.

Traynor is feeling bad for herself and identifies as a naive car lessee. I feel bad for her, because she probably could have gotten out of the fee, had she known what to do.


The disposition fee is commonly waived if you buy or lease a car of the same make. Had Traynor wanted another Kia, it is unlikely that the dealership would have sent her a bill for the fee. It’s a way for them to keep you brand loyal. Almost like a bribe. A really effective one. But she didn’t want a Kia again. Instead, she leased a new Ford.

Had there been equity in the vehicle, Traynor could have sold her Kia to Ford, which would have had the legal effect of “purchasing the vehicle,” and would have eliminated the fee. The fee only applies when the lessee turns in the car, hands over the keys and walks away.

The trouble with leasing a Kia (or a Ford, for that matter) is that these cars don’t retain their value as well as luxury brands, or even Hondas and Toyotas. At lease end, a Kia may be worth less than the buyout price, giving a lessee few options but turning it in and paying any lease end fees.

I have purchased and leased many cars over the years. I have been talked down to, treated poorly by sales staff and lost entire days of my life in car dealerships. I have watched hours of my life slip by while the guys on the other side of the glass act like they’re Wall Street traders. I have no idea why they make us suffer.

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The only way to fight the system is to be smarter than them. Do your research, know what car you want and what you’re willing to pay for it before you walk into the dealership. When they start wasting your time, be willing to walk out. Don’t let them wear you down. Make them work to earn your business.

When it (finally) comes time to sit with the finance manager, make him go slowly. Ask questions and keep asking until you understand. Some things are non-negotiable, but there is a lot of wiggle room, and that’s the time you need to be sure you’re comfortable with the deal — not at lease end.

Traynor reached out to Kia Finance to request that it waive the disposition fee. Legally, Kia has a right to collect it. Unless a lessee finds a way out of it while she still has the asset, the fee is all but a certainty. From our perspective, her story has unfortunately made its way to our Case Dismissed file.

Leasing is a tricky game, but if you play it well, you can come out on top. Knowing the rules, however, has to be part of the winning strategy.

Is a lease disposition fee a junk fee?

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  • Fishplate

    You’re going to pay the fee at the beginning, or at the end. Fees have been glossed over since Og sold the first wheel to Glog. But you’re going to pay the fee at the beginning, or at the end. They aren’t going to not make a profit, whatever they define as a profit.

    That there’s shenanigans at the car-buying place should come as a surprise to no one.

  • AAGK

    What does, “the fee was disclosed but not explained,” mean? That is why these are junk fees, they don’t necessarily have an explanation but so long as the amount is disclosed, we know to expect them.

  • AAGK

    If she knew about the fee, she should have factored the $400 into her monthly cost calculation which is @16/mo additional for a 2 yr lease. There is no reason she couldn’t have made that calculation by herself.

  • MarkKelling

    Disposing of the leased vehicle is a cost of business and should be accounted for in the lease price. I guess the auto leasing business is taking lessons from the airlines and “unbundling” things now so they can show a super low monthly payment amount.

    And what is this about being treated badly when buying a car? I have been involved in the purchase of 3 different vehicles recently at 3 different dealers that were unconnected to each other. None of the dealerships treated us badly or wasted our time. In fact, the last place I bought a car, I was in and out in under 2 hours and I got the exact price I wanted to pay for a car equipped exactly how I wanted it. Maybe some people just like to do battle with car dealers and actually enjoy the drawn out process of arguing over a dollar and that is why this type of treatment continues. Walk away is sometimes the best response.

  • JewelEyed

    I was patronized, talked down to, and ignored when I was looking for a car. The guy at the dealership kept talking to my boyfriend even after it was made apparent that he was not paying for any part of the vehicle. And this was after they miraculously didn’t have the car we asked about before we went and tried to upsell me a newer model. I ended up getting the model they offered, but not from them!

  • Seems like the “fee” should be viewed as a penalty for not getting a new leased vehicle with the same dealer.

  • I had the same experience! I was ignored and talked down to and the sales rep kept talking to my boyfriend. Ironically, I was the one that had interned in the auto industry.
    I hate to say it but there might have bee some sexism going on.

  • KennyG

    I could be wrong, but I have a feeling that the disposition fee was on the lease paperwork that she signed. It has been on every single lease of a car I have made over the years [probably a dozen or more]. I can’t say I have ever heard of a car lease that did not have a disposition fee attached to it. They certainly could bundle it in so the “real” lease payment is shown, but if one purchases the car ayt the end of the lease, or in many cases, if they buy/lease another car from the same manufacturer the disposition fee may be forgiven. Keep in mind, that many leases today are not written by the car manufacturers, but by banks/credit unions etc, so even if you purchase another car of the same make, the leasing company gets no benefit so they have no incentive to cancel the disposition fee unless the manufacturer and lender have some kind of agreement. I am perfectly happy to have the disposition fee as a separate charge due at the end of the lease since in some cases I do purchase the vehicle at the end of the lease, so why would I want to pay the extra money every month? From my perspective, except in the extreme, the more choices a consumer has usually the better, however, the consumer should do at least a bit of reading what they sign, instead of objecting to it 3+ years afterwards.

  • Pat

    Sorry but this just sounds like whining to me and I do not blame Kia for saying no to a refund. Since they are not buying the car, it costs the dealer money to prepare the car for sale. It has to be inspected, any issues need to be fixed, and it has to be cleaned. If they were complaining about being dinged for every single paint chip (like when you rent cars), then I could see an argument about being charged. It seems it has gotten to the point that some people consider any fee a junk fee.

  • Harvey-6-3.5

    You don’t need to hate to say it. There is undoubted sexism. When I shop with my wife for the car she’ll be driving, the salespeople still talk to me, even when I say that “she’s the one deciding”. Some of them are stuck in the 50’s (1850s).

  • Rebecca

    I have had a brand new car exactly once, a VW Passat that I leased for 3 years, and it was absolutely cursed. My husband was hit head on only 3 months after we got the car, someone skidded on ice and crossed the center line. Because the car only had about 4k miles, it was repaired to the tune of $16k+, sustaining frame damage. Then the underground garage in my apartment building flooded and the car was under several feet of water. I was rear ended 3 separate times, all of which I was sitting at a stop light at a complete stop and couldn’t go anywhere. The last time, the guy hit me so hard the cords on the sunroof snapped and broke the sunroof. My husband was sitting in a drive thru and someone gunned it in reverse and destroyed the entire passenger side of the car. After the last accident, there was only a month and a half left on the lease, so I made the last month’s payment and turned it in early. They actually tried to get me to purchase the car. It had been repaired at the dealer after each accident, so they couldn’t hold me responsible for anything. But I imagine they sure had a hard time selling it with all the accidents and a flood reported, including frame damage. I’m sorry for whoever got stuck with it.

    Every other car I have ever owned, or will ever own, I have paid cash. I prefer a reliable used car with no payment and a low insurance premium. I think the experience with the new car definitely made the decision never again much easier for me. I buy a car in the neighborhood of $6k and drive it until it dies. I just don’t care to have a new car, it isn’t worth it for me. We get slack sometimes from his family, especially since an in-law owns a chain of dealerships, and as my husband says, his favorite car is one that’s paid for.

  • Rebecca

    That’s true. A good detail is in the neighborhood of $150, and this is a car being prepared for sale so it needs to be spotless. The dealership also definitely has overhead costs involved with the paperwork for the title and registration, including fees.

  • JewelEyed

    I suspect as much as well. He was also going to charge me thousands more than I eventually got the car for. I actually got the car for less than it was worth by buying it from a dealership who didn’t sell that brand of car. It was something they took on trade. :)

  • taxed2themax

    I agree.. however, I think that there really is no mathematical or financial nett difference if – for example – that fee is amortized into and “built-into” the monthly payment (call me an extra $16/mo) versus a one-time, separate balloon payment of $400 due at the end. I agree that it IS a cost of doing business, so I think it should be included in the total lease package. However, I don’t then say that it *must* be accounted for in any one manner — just so long as however it’s accounted for, is disclosed in line with Federal Law.

  • AAGK

    Of course the model is the same. Make the monthly cash amount as low as possible and human nature makes folks forget about the other fees. Who knows what goes to what, but it doesn’t really matter, so long as the fee is disclosed then you factor it in when making a decision. Personally, I would rather pay it at the end and have a lower monthly payment bc then I can earn 2 years of interest on it, rather than pay it all along.

  • cscasi

    However, it HAS to be shown in the vehicle lease agreement. For example, I leased a Honda Pilot and about 10% of the way down the long contract page is a section/block whose header: FEDERAL CONSUMER LEASING ACT DISCLOSURES stands out in a different background color than the other blocks on the contract (background is black and the lettering is white as opposed to the other blocks whose background is blue and letters in white on my pink colored copy of the CLOSED-END VEHICLE LEASE AGREEMENT.) so it sets itself out. Item 3. OTHER CHARGES (not part of my Monthly Payment) clearly states: Turn-in Fee (if I do not purchase the Vehicle) $350.00.
    So, it has to be stated on the contract and it is prominently. It is a federal law.
    They are not going to collect it up front or amortize it into the contract (because you would have to pay finance charges on that $350, thus saving you money) because the dealer does not know if you are going to purchase the vehicle at the end of the lease or use any residual value you have built up in the vehicle during the lease (if any), towards leasing another vehicle from them.
    I know concern it voices over this “fee”, but one just needs to read the contract because it is right there.

  • cscasi

    It is a fee that one pays at the end of the lease, if he/she decides not to purchase the vehicle (or perhaps trades it in and gets another vehicle of the same make) from a dealer who sells that make. The Federal Consumer Leasing Act Disclosure block on the lease contract prominently states that and the “fee” is listed right there.

  • cscasi

    The Federal Consumer Leasing Act is the law that states it has to be disclosed and it is the “Federal Consumer Leasing Act Disclosures” block that will contain the turn-in fee.

  • comanchepilot

    Just because you don’t read the contract doesn’t mean the fee does not exist.

    They glossed over repo if you don’t make the payments.

    They glossed over required maintenance.

    They glossed over attorney’s fees if they sue you.

  • AAGK

    Agreed. But the lady said it was. She just kind of forgot about it or something. She should consider it a reward for not being stuck with a Kia?

  • AAGK

    She said it was disclosed. My point was she should’ve factored all the fees into her decision making in the first instance. Of course if it’s hidden, then she shouldn’t be on the hook.

  • sirwired

    If the fee was disclosed, but she didn’t understand it, it’s her responsibility to ask. They certainly aren’t going to go out of their way to explain it, if it might make you less likely to close the deal.

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