Hey, what’s this disposition fee from Hyundai?

Look carefully at your lease agreement. Did you agree to a disposition fee?

When Kim DeBiase ends her lease for a Hyundai Sonata, the dealership demands a $400 payment for a disposition fee. And that puts her in a bad disposition. Does she really have to fork over the money?

Question:

I leased a Hyundai Sonata in 2011 from Hyundai of White Plains, NY. The day after my visit, the salesman who leased me the car quit and other people had to scramble to complete my lease. I returned the car at the end of the lease and decided not to lease another Hyundai.

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In August, I received a bill for a $400 disposition fee plus $29 tax. I estimate that I paid $13,000 in fees for this car. The new car cost approximately $25,000, and the resale value was about $18,000.

In other words, Hyundai of White Plains is making about plenty of money on this car. And now they want to charge me another $400?

I received a generic response from Hyundai and a copy of the original lease. I see the $400 charge stuck in the middle of the first line of charges, which includes four total charges.

The last amount on that first line is the “total of payments – the amount you will have paid by the end of the lease. I note this amount of $13,677 does not include the $400 disposition fee, which is listed right next to it. The total includes all the other figures on that line, but not the disposition fee.

A little deceptive, don’t you think?

I didn’t even initial the fee to confirm I had accepted it. The “disposition fee” as referred to on the back page says absolutely nothing I can understand.

I’ve done some research online and see that this is a common complaint of Hyundai owners. The company wants us to pay $400 plus tax to cover the cost of reselling my lease.

Can you help? — Kim DeBiase, Thornwood, NY

Answer:

A disposition fee, also known as a turn-in fee, is found money for a dealership. It supposedly covers the cost of transferring the lease, but that should be the cost of doing business for the company.

If you lease another Hyundai or are, in the company’s words, “a loyal customer,” then you may be eligible for a waiver. Just lease another Hyundai within 60 days, and it will zero out the fee.

You agreed to this fee when you signed your lease, no question about it.

But did you know you were agreeing to it? You say you didn’t and I believe you. It looks as if someone slid that fee into your lease agreement, hoping you wouldn’t notice. You weren’t asked to initial the fee, it wasn’t part of the total, and the disposition fee wasn’t explained to you.

The disposition fee explained

The disposition fee fits the classic definition of a junk fee. It serves no purpose other than to enrich the company.

Still, you have to read your paperwork carefully before you lease a car. These hidden fees are becoming more common. Just read the online complaints about Hyundai’s disposition fee, and you’ll know what I mean. My point is, you should have read the contract thoroughly before you leased the car, not after you returned it.

The time to argue with your dealership about a junk fee is before signing, not afterward. Once you’ve agreed to Hyundai’s contract, you have to live with the terms.

So why would I get involved? Well, I think the form response you received was inadequate. It didn’t sufficiently explain the fee or why it wasn’t included in your total. I think you deserved a better answer, and I hoped that by getting involved, you would at least get some clarification.

The good news

I contacted Hyundai on your behalf (I list its company contacts on our site). You received a call back from a company representative, who said the disposition fee is standard, and that “all companies hide the fee” in their contracts. He also explained why it was there, and that the disposition fee is mentioned three times in the paperwork.

As a gesture of goodwill, Hyundai offered to refund $100 of the disposition fee. That’s a fee to which you should have never agreed in the first place, but that you’re now contractually obligated to pay. Their resolution surprised me. I expected nothing more than an explanation.

Is a disposition fee a legitimate charge?

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35 thoughts on “Hey, what’s this disposition fee from Hyundai?

  1. Is it a junk fee? Absolutely! Just like the clear coat protectant or other crap they try to sell you when you buy a car.

    But you signed the paperwork and it’s amazing they wanted to give you $100 back. If I remember correctly (from what a car salesperson friebd told me once) the dealership setd thendispostion fee and pays the manufacturer a set amount. Which theoretically could be the $100 in this case.

  2. Junk Fee? Not really. Just as “junky” as a delivery fee. You have had the use of a car. At the end of the lease, there are things the dealership needs to do to prep the car for resale. And you pay for that.

    If you don’t like it, simply buy the car in the first place. Then when you trade it in, the value will be lower than KBB retail, because the dealer wants to get paid for handling the prep.

    Or, you could just not bother with a car.

    Life has costs associated with it. Deal with that simple fact, and life will be simpler.

  3. Leasing, in general, is a waste of money. The complaining lady proved it to herself, by working out the math. But the lower lease payments completely destroy most people’s rational thought processes. They are incapable of wrapping their brain around the concept that lower monthly payments are a bigger hit to their wallet, by the time everything finishes adding up.

      1. Ask her, not me. She’s the one who decided that paying almost 14 thousand out of her pocket for the privilege of owning … absolutely nothing … was such a great deal.

          1. What were her options? How can you or anyone say she chose POORLY.
            You mean all people who lease cars choose poorly?

  4. “all companies hide the fee” in their contracts.

    I might be mistaken but isn’t this where the fees are supposed to be? It appears that the fee was disclosed when she signed the contract so why does she think she should not have to pay it at the end of the contract?

    1. When I was a kid the nuns and other teachers very quickly and firmly corrected any student who said as an excuse, “Everybody else was doing it!”. Didn’t work then, and does not work for me now. Better corporations rise above that tired excuse.

    2. I think the problem is that the fee is “hidden,” meaning that it is buried in a bunch of fine print rather than emphasized in any way, and it is not clearly disclosed or explained why it’s being charged and what it covers. If companies want to charge fees, they should at the very least explain that much to the customers they’re charging those fees to.

  5. Oh look; someone else that didn’t bother to read their contract and is now complaining about it.

    It’s a Christmas miracle!

      1. I’m reading all this on December 26. Do I understand that it all took place YESTERDAY, on Christmas???? Love it! MUCH better than sitting around Grandma’s house.

    1. What charges should I expect after I turn in my vehicle on my End of Term Invoice? 
      The following charges may be included on your End of Term Invoice, if applicable: 
      -Excess wear and use-Excess mileage
      -Disposition (Turn-in) fee
      -Any past due and unpaid monthly payments
      -Any other fees (e.g. unpaid late payment fees, taxes, tolls)

      We definitely need a miracle!

      1. Not sure she really was careless. Maybe she just did not want to pay this so-called junk fee.
        So she was intelligent enough to recruit you to fight for her. At the end she got a discount.
        I wish you had a cut of all the discounts you got folks who write you. Where’s that tip jar?

  6. Of course it’s a junk fee, but junk fee is just another name for “profit”, and the LW agreed supposedly to give the dealership this profit under the terms in the contract.

    I’d really like to hear Clark Carvers opinion of this contract and comment. The idea that “everybody hides it” appears to be an admission of deception, that and the omission of the $400 fee in the total may be enough to indicate fraud or deceptive trade practices.

    1. Oral statements are very rarely admissible when challenging a contract. It’s very difficult to break a contract and even more difficult to prove a pattern of deceptive practice by a business. Of course car dealers have some of the worst contracts from a consumer standpoint that I’ve ever seen. I am a former contracts attorney and when I bought my last car I really had to concentrate and read carefully before I signed. And they are pros when it comes to manipulation during the negotiating stage and trying to distract you. While that is not an excuse to sign something you don’t understand, I really admire people who can walk out of a car dealer with a good deal. The deck is stacked against you.

  7. Why not parlay the innovative fees into consumer advocate-ism? You can still provide your services for free*

    * documentation fees, research fees, communications fees, case disposition fee, and local/state taxes not included. Consumer pays processing and handling. E-mail within the next 2 days and receive help on a second issue for free; just pay additional processing and handling.

  8. The argument should not be over the components of the payments, which are infinitely adjustable. Argue that the total price is itself the controling amount, and, by excluding the disposal fee from the total, that fee may not be collected. Inconsistencies in a contract are interpreted to the benefit of the weaker litigant. Then, since $400 is not worth litiagating as an individual, instead of giving up, use the knowledge that the fee is hidden in every contract to start a class action suit.

    You don’t need a consumer advocate, you need a shady lawyer!

  9. I’m not a leaser by nature, but I view this episode as another one of life’s lessons that I learn from reading Elliott’s emails. Just like photographing the rental car before
    and after renting, I’m a bit wiser.

    Contracts are often especially designed to obfuscate sections which are not in the interest of the consumer. Parenthetical clauses with reference to another section of the contract, hiding a charge in the middle of text in words rather than numbers, and the use of “legalese” rather than plain language are just some of the tactics.

    Legal ?… yes. Ethical ?…No. But it is the legal language to which both parties are held.

    Caveat emptor

    1. As I mentioned elsewhere caveat emptor is basically dead. I haven’t seen am auto lease agreement in 15 years, but I recall that the fees and charges were reasonably spelled out.

      Consumer contracts have disclosure requirements which are generally adhered to as it’s low hanging fruit for consumer attorneys.

        1. I financed my last car from my credit union. Depending on the cost, I hope to buy my next car with cash. I leased one car when I was younger (the aforementioned lease 15 years ago) and it wasn’t a particularly good deal.

          That being said, a lease is merely a financial vehicle. It’s not fundamentally good or bad, but depends purely on the terms.

      1. I just looked at my auto purchase contract. Is all the information about fees and so forth there? Yes. Is is written in a way that the reasonable person can understand it? In my opinion, no. And so much of it is pre-printed that the consumer is in a take it or leave it position if they don’t like those terms. You and I have an advantage because of our training when it comes to reading and understanding “legalese.”

        1. Granted I am in a better position to understand the terms of any given contract, given my background. However, since I also have to write contracts, I have to have a good idea of what a lay person can understand.

          Like I said, it’s been 15 years since I’ve seen an auto lease so I can’t speak definitely. but my recollection was that the fees of my lease were spelled out sufficiently so that there was no ambiguity.

  10. My step-mother was one of those want-a-new-car-every-two-years types, so she leased. Every time, she had to pay the ridiculous overage fee because she drove too many miles. She finally stopped leasing when her Saab ended up sitting in the driveway for four months because she was so far over the allowed mileage. I’ve had friends stung by leases as well. As others have posted, at the end of the lease they owned nothing, and every one got charged some sort of additional fee.

    1. At the end of the lease, they owned all the use that they had got out of the vehicle, and they did not owe the other $14,000 or $15,000 that would be left on a car purchasing loan.

  11. If it wasn’t in the total amount owed then Hyundai stole $400 from her, She should take the dealership to small claims court, she may lose but at least she can cost them more than $400 in time and expenses.

  12. There ought to be a law: every single penny of cost for ANYTHING is listed together, in the same size type, in the same color, on the same page, with a total of what it will cost. The buyer and the manager, not the salesperson, signs off on this list. Hiding fees is a great money-maker for companies and it’s just plain fraud.

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