Food for thought.
I just did some actual number crunching and came up with the bottom line difference between buying outright with ZERO down and a 0% interest loan from GMAC for 5 years with $1,000 towards the car in incentives. Or, a three year smartbuy with ZERO down, 4.5% interest and a 60% residual, 12k miles a year and $2,250 in incentives. The car is a 2005 Rendezvous with a MSRP of $39,900 and the residual is calculated on $40,900. I took off the $1,250 in GM card bonus earnings and $355 in card earnings in my calculation. Sales tax is 8.75% by me, and the dealer is selling the car to me for $35,978 which is $200 over tissue.
If I were to smartbuy the car my monthly payments would be $421.82 a month.
If I were to outright buy the car my monthly payments would be $620.15 a month.
At the end of three years (35 payments) I will have paid a total of $14,763.81 if I were to smartbuy the car. My residual or trade in would be set at $24,540 from day one.
At the end of three years (35 payments) I will have paid a total of $21,705.09 if I were to outright buy the car. What I owe doesn’t make a difference because I paid more over the 35 months. For info sake I would owe $14,883.49. So far I paid $6,941.28 more for the outright buy.
Now it is three years later and I want another car. I walk into the dealer with my smartbuy and am given the $24,540 I owe GMAC on my smartbuy car for the car. Plus I get $2,147.25 in sales tax already paid on the residual applied to my new car.
Now it is three years later and I want another car. I walk into the dealer with my outright buy car and I need to get $14,883.49 on trade so as not to owe anything. Add the $6,941.28 extra I paid for the outright buy in higher payments, and I need to get $21,824.77 on my trade to have laid out the same amount of money as if I had done a smartbuy.
Do you think I get on a trade in $21,824.77 for a three year old Rendezvous with a MSRP of $39,900 with 36k miles on it? Sales tax by me is 8.75%. If I were to sell the car privately I would have to get $23,570.75 plus the costs to sell and insure the car while selling it.
Remember with a smartbuy if the car is stolen or totaled I just have to pay my deductible and walk away because of gap insurance. If the car is purchased outright, I am at the mercy of a dingbat insurance adjuster and have to fight to get what I think the car is worth.
I do not work for a car dealer, and am not in the automotive industry. I crunched these numbers for my personal use and am sharing them with you for information purposes only. Enjoy.
I just did some actual number crunching and came up with the bottom line difference between buying outright with ZERO down and a 0% interest loan from GMAC for 5 years with $1,000 towards the car in incentives. Or, a three year smartbuy with ZERO down, 4.5% interest and a 60% residual, 12k miles a year and $2,250 in incentives. The car is a 2005 Rendezvous with a MSRP of $39,900 and the residual is calculated on $40,900. I took off the $1,250 in GM card bonus earnings and $355 in card earnings in my calculation. Sales tax is 8.75% by me, and the dealer is selling the car to me for $35,978 which is $200 over tissue.
If I were to smartbuy the car my monthly payments would be $421.82 a month.
If I were to outright buy the car my monthly payments would be $620.15 a month.
At the end of three years (35 payments) I will have paid a total of $14,763.81 if I were to smartbuy the car. My residual or trade in would be set at $24,540 from day one.
At the end of three years (35 payments) I will have paid a total of $21,705.09 if I were to outright buy the car. What I owe doesn’t make a difference because I paid more over the 35 months. For info sake I would owe $14,883.49. So far I paid $6,941.28 more for the outright buy.
Now it is three years later and I want another car. I walk into the dealer with my smartbuy and am given the $24,540 I owe GMAC on my smartbuy car for the car. Plus I get $2,147.25 in sales tax already paid on the residual applied to my new car.
Now it is three years later and I want another car. I walk into the dealer with my outright buy car and I need to get $14,883.49 on trade so as not to owe anything. Add the $6,941.28 extra I paid for the outright buy in higher payments, and I need to get $21,824.77 on my trade to have laid out the same amount of money as if I had done a smartbuy.
Do you think I get on a trade in $21,824.77 for a three year old Rendezvous with a MSRP of $39,900 with 36k miles on it? Sales tax by me is 8.75%. If I were to sell the car privately I would have to get $23,570.75 plus the costs to sell and insure the car while selling it.
Remember with a smartbuy if the car is stolen or totaled I just have to pay my deductible and walk away because of gap insurance. If the car is purchased outright, I am at the mercy of a dingbat insurance adjuster and have to fight to get what I think the car is worth.
I do not work for a car dealer, and am not in the automotive industry. I crunched these numbers for my personal use and am sharing them with you for information purposes only. Enjoy.