Smartbuy vs. Purchase @ 0%?

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Smartbuy vs. Purchase @ 0%?

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Chevrolet >> Chevy Trucks, Vans & SUV's >> Tahoe >> Smartbuy vs. Purchase @ 0%?

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Smartbuy vs. Purchase @ 0%? - 3/22/2008 2:47:21 PM

locobill1

Posts: 1
Joined: 3/22/2008
Status: offline

I just picked up my wifes new 08 LT2 Tahoe. I need some advice on financing. I set this up as a smart buy. I got employee pricing. The MSRP was 43,900. The GMS pricing brought it down to 37,500. I set it up as a smart buy. But I think I have changed my mind. I can finance it at 0% for 60 months. If I buy it I lose 500 in bonus cash that I got on the Smart buy. Here's the numbers:

I'm putting 3k down.

36 month smartbuy 12,000 miles per year:

37,500 financed on the smart buy with GAP is 553.00 per month @ 35 total payments would be $19,355.
60 months @ 0%
38,000 financed on a purchase at 0% at the three year mark at 625 per month would be 22,166 total payments. [/size] Smartbuy vs. purchase saves a total of 2,800 dollars in monthly payments over a 3 year period. The problem is that after three years on the purchase I would only owe 15,834. I looked at the trade value for an 05 Tahoe that is comparable and books for 20,000 - 23,000 depending on where you look. If we purchase, assuming at the end of 3 years our new Tahoe had a comparable trade in value we would have over 7,500 in equity which far exceeds the savings on the savings in the monthly payments of 2,800. Is there anything that I'm not considering? Overall it looks to me we would be better off with a purchase. Anywhere from 2,000 to 5,000 better off depending on the actual value at the end of 3 years.
The ballon payment at the end of the smartbuy is 27k. If we purchase the payments are 83 more per month, but we would only owe $15,834. The dealership is really pushing the smartbuy, which by the way is at 9%. Any GM finance guys out there? What do you think?

_____________________________

07 Silverado Z71 4x4
08 Tahoe LT2

Post #: 1

RE: Smartbuy vs. Purchase @ 0%? - 3/22/2008 4:06:31 PM

mary900

Posts: 175
Joined: 12/4/2007
Status: offline

My two cents...

Leasing (aka Smart Buy) is an important component of a dealer�s success so it makes sense that the dealer would be pushing the Smart Buy option. Payments one makes are basically paying interest and not much on the principal.

Unless you own a business and can write off the cost of the lease as an expense, it�s best to purchase. Also, you will have the mileage limitation of 12k per year.

Here�s a link to lease vs. loan calculator. It is an eye opener.

http://www.cars.com/go/advice/financing/calc/loanLeaseCalc.jsp?vpLoan=0&tvLoan=0&stLoan=0&microsite=false&mode=full&flt=n_rval

(in reply to locobill1)

Post #: 2

RE: Smartbuy vs. Purchase @ 0%? - 3/25/2008 9:23:28 PM

TPeezy

Posts: 114
Joined: 12/19/2006
Status: offline

I was in the same position when buying my 07 LT2. Turns out the smartbuy is anything but smart. When you crunch the numbers the much better decision turns out to be purchasing the tahoe. I used a little of my finance skills (finance major) and figured out that the overall equity you gain in purchasing the vehicle greatly outweighs the minimal amount saved with the smartbuy. PURCHASE IT

(in reply to mary900)

Post #: 3

RE: Smartbuy vs. Purchase @ 0%? - 3/26/2008 8:53:01 AM

thdrill

Posts: 32
Joined: 8/25/2007
Status: offline

Speaking from experience having done a smartbuy for my 2005 Colorado when I had it...PURCHASE IT. The smart buy is not a true lease but rather a shortened OWNERSHIP period. Whereas a regular lease the dealership "owns" the vehicle and you are leasing it from them...you acutally own the vehicle for the time you are using it with a Smart buy. This in turn makes for greater difficulty with getting out of the contract as the dealership has to buy the vehicle back.

(in reply to TPeezy)

Post #: 4