Car lease buyouts are increasingly attractive, but often come with extra fees, Philly-area consumers find

Nadine Hughes drove an hour to Reading to buy her 2020 Chevy Equinox off its lease.

A dealership there was the closest one she could find that wouldn’t tack on additional charges, such as a $449 document fee or a $200 safety inspection, she said.

Dealerships in the Philadelphia area, as well as in Allentown and Bethlehem, all told her that they had to at least charge the document processing fee, which Hughes knew was not mandated by law.

“Little did they know, I did my homework,” she said of the other dealers. Still, “it just frustrated me to no end that they don’t understand that people are out here on a strict budget and they just can’t afford it.”

The 53-year-old Phoenixville woman, who works as a surgical scheduler at an area hospital, was one of several readers who responded to The Inquirer’s story earlier this month about a Malvern man’s experience being charged a $1,000 lease buyout fee. His initial lease agreement stated that there would be no fee if he opted to purchase the 2019 Kia Optima when the lease expired last year.

» READ MORE: A car lease promised no buyout fees — but this man couldn’t find a local dealer who would charge less than $1,000

That man, 36-year-old Benjamin Sugarman, ended up paying the extra fee at a now-shuttered Conshohocken dealership, because he felt he had no choice. He wanted the car, he said, and he couldn’t find a dealer that would charge him less.

“I believe the dealers in Pennsylvania are taking advantage of customers by imposing these fees and charges that are not in a contractual document, a lease,” he told The Inquirer. “That’s just not OK.”

The trend itself is not new: Car dealers have long been known to tack on some additional fees for lease buyouts and other transactions.

“All these dealerships, they’ll tell you the same thing: ‘That is what they charge,’ ” Hughes said, in regards to safety inspections and documentation fees.

However, lessees whose three-year contracts have expired in the recent years have much more equity in their vehicles on average than consumers whose leases expired pre-pandemic, CNBC reported earlier this year, citing Edmunds data. At the same time, buying a car, not off a lease, is more expensive than ever, and the autoworkers’ strike brings new uncertainty.

Elsewhere, lawsuits have been filed on behalf of customers in similar situations, alleging violations of the Consumer Leasing Act, a federal law that prohibits dealerships from charging fees not disclosed in original lease agreements.

In the weeks since publicly sharing his experience with buyout fees, Sugarman said he hasn’t heard any response from Kia or any of its dealerships. The dealers Sugarman dealt with did not return requests for comment from The Inquirer.

“While we cannot comment on any fees that dealers may be assessing independently, the buyout price is set forth in each customer’s lease agreement,” a Kia spokesperson said Friday in a statement. They confirmed, too, Sugarman’s understanding that Pennsylvania customers can only do lease buyouts through licensed dealerships, while New Jersey customers can do so directly through Kia Financing.

The Pennsylvania Attorney General’s Office said it continues to encourage consumers to report situations in which they believe they were harmed by a business.

“I cannot comment on active investigations or confirm the existence of investigations,” office spokesperson Brett Hambright said Thursday in a statement.

The office encourages consumers to submit these complaints online at: attorneygeneral.gov/submit-a-complaint/.

Sugarman said he looked into submitting an online complaint months ago, but was dissuaded as he scrolled through the one-page form, which prompts users to submit a complaint summary, explain how they would like the issue resolved, and upload documentation.

“It looked like it was going to be a laborious task to submit an official complaint,” Sugarman said. “I just didn’t have the time.”

He tried calling the Attorney General’s Office to verbally log a complaint, he said, but was told he had to use the online form.

“Considering the volume of complaints we process (on all matters), the most efficient method to receive complaints is through our online form. This is also most expedient for the consumer to provide all the required details,” Hambright said. “The form requests all necessary information so we can best understand the facts and obtain necessary contact information to assist the consumer.”

The office also accepts mailed forms, he said, and phoned-in complaints in the event that “the consumer cannot complete the form,” though he would not comment specifically on Sugarman’s situation. Everyone with internet access is encouraged to file complaints online, he added.

“We can open investigations through a variety of ways,” Hambright said, “including learning about issues through the media, receiving consumer complaints, or even experiencing something ourselves.”

Judy Ganister was close to tears as she drove home from Norristown Jeep in April.

She’d gone to the dealership to inquire about buying her 2020 Jeep Cherokee off its three-year lease.

Her initial lease agreement said she would have to pay a $500 buyout fee if she wanted to purchase the car at the end of its three-year lease, according to paperwork reviewed by The Inquirer. Ganister said she walked into the dealership earlier that day expecting to pay maybe $1,000 extra in fees when all was said in done.

Instead, salespeople at the dealership told her she would be charged an extra $6,000 on top of the $18,000 purchase price.

“I needed to have a car. I didn’t want to buy a new car,” said Ganister, 66, of Blue Bell. While thinking she might be getting ripped off, “I felt like I had no recourse.”

The salesperson provided her with a draft invoice, which The Inquirer reviewed. The document broke down the additional charges, including: a $1,995 dealer fee; a $1,495 “CPOV” charge (perhaps standing for “certified pre-owned vehicle”); $299 for a safety check; and $299 for security coding.

The dealership would also be charging the $449 dealer document fee, the maximum price Pennsylvania dealers are allowed to charge for electronic document preparation.

Norristown Chrysler Dodge Jeep Ram did not respond to emails and phone calls seeking comment about these charges.

Ganister ended up being able to buy her vehicle out through her leasing company directly, with only the $500 buyout fee that was in her initial agreement.

Months later, however, she said the experience at the dealership still upsets her.

“I felt very vulnerable,” she said, “and I felt taken advantage of.”