GMAC Loans: What is SmartBuy?

October 15, 2013

GMAC is what’s known as a “captive finance company” and GMAC loans apply specifically to General Motors cars or trucks, because of the special relationship that GMAC has with the GM company. The definition of a captive finance company is that it is owned by an auto maker and acts as a separate company for financing the vehicles that the manufacturer makes. Though GMAC was essentially sold by General Motors several years ago, it still acts as a captive finance company in that one of its main goals is to help customers purchase General Motors vehicles.

What is GMAC SmartBuy?

GMAC’s “SmartBuy” program is an alternative to leasing, where the drivers who participate have several options at the end of a loan term. GMAC operates the SmartBuy program in conjunction with their SmartLease program, where GM customers can select a more standard leasing option.

The Options

The most distinctive part of GMAC’s Smart Buy program is that buyers can choose to hold onto the vehicle by paying off the loan in full, or sell the vehicle back to a GM dealership. There is often a “balloon payment” involved, where the customer “finishes buying” the vehicle by making the lump payment (generally several thousand dollars).

From the Street

While some drivers report satisfaction with a SmartBuy system, others are less optimistic. Drivers who read the fine print and allow for some of the vagaries of used car valuation can use SmartBuy like an “eternal lease” program, driving a new GM vehicle for several years before turning it in and exchanging it for a newer one.

However, some drivers do not develop the necessary trust with GMAC that leads to this kind of long term relationship. Some common problems reported include an unwillingness on the part of the GM dealerships to buy back vehicles for fair prices. Other customers report that dealerships may charge for questionable damages to the vehicle at trade in time.

The Power of Choice

What the GMAC SmartBuy program offers is essentially a “hybrid” deal between a lease and a purchase. The idea behind this program is that deciding whether to buy or lease is a complex decision. With SmartBuy, drivers can always evaluate whether it is better for them to own a vehicle at a certain point in its life, or to get rid of the liability through “returning it to GM. Customers can use GMAC financial tools on the company’s web site to figure SmartBuy or other options into a household budget. GMAC will also provide information on different monthly payments according to SmartBuy terms, financing periods and related details.

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A driver who reads all agreements carefully can find benefit in making a series of choices about using SmartBuy to stay in one or more GM vehicles for the long haul, while having the option to “buy in” or “cash out” later in the game. Talk to GMAC reps about what kinds of deals are available in your state.

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