SmartBuy

[ETD]

Hmmmm. To a car saleman, we're probably stupid, stupider, or stupidest. I guess that I'm either stupider or stupidest when it comes to buying cars according to UTSHummer. I'm on the SmartBuy track, paying $114 a month for 20K miles/year after having taded in my passat wagon. I think it's whatever you can live it because they'll get you anyways, in the beginning, in the middle, or in the end. I was never told that they were giving away the H3's fur nothin'

[Rick]

Hi All... I run a company that consults auto dealers in the area of finance... As well as other matters.

Smartbuy (as someone pointed out earlier) is very similar to a balloon note. You may or may not be able to walk away at the end of the term. The difference between Smartbuy and Smartlease (or any lease) is that with Smartbuy... You own the car.. It is titled in your name. With a lease you don't. The lease company owns it and you "lease" the car from them. It is titled in the lease company's name C/O you. Some may think that there is no difference but there is. Mostly business and legal stuff. The Smartbuy allows you to make lower payments while you own it and then either trade it or pay the balloon. There are options that allow you to walk away. With most leases now you can just walk away at term end and only owe for excess miles and wear and tear over what was originally agreed upon. The differences come up in insurance. Leasing usually costs you more becuase the leasing company wants higher coverage than most people have. They want to be protected just in case. The leasing company or finance company sets the residual value of what they think the vehicle will be worth at the end of the term. I've known some people to buy the car and sell it for a profit because the lease company set the residual too low. Most just walk away. This is why you are crazy to put money down on a lease. (More than what you normally would for taxes and tags.) Why put money down to just walk away at term end???

Leasing is great for those who tend to trade every few years and drive less than 15k miles per year. Leasing also makes sense for business reasons and are great write-offs. Others, like myself, sometimes keep cars past their payoff and want true ownership. (I like to modify my vehicles... I'm not paying for mods to hand it over to the lease company!) If you tend to keep cars a long time and/or you drive high miles.. Go for a longer term to lower the payments. You can finance now out to 96 months. (Though I feel you'd be crazy to go over 60 or 72 months.)

Just my .02

Rick

[HumbleAg]

Originally posted by usetosellhummer:
Smart buys are for stupid people.

I guess I need to give back my engineering degree and MBA.

Blanket statements are for stupid people.

Smart buy can make sense for several reasons:

1) If car has a high residual value (as H3 does), but anticipated depreciation is high (these don't always correspond), then smart buy can be less money if you only keep the vehicle a couple of years. Trading out of a 5 or 6 year note on a depreciated car can cost a bunch.

2) Some states (like the great state of Texas) have personal property tax on leased vehicles, this is passed on to the lessee. No such thing with smart buy (or a standard purchase).

3) Some people want to keep their debt ratio down (a $300 note vs a $500 note can make a difference if you are buying a house).

That said there are some serious criteria you need to consider for a smart buy (or a lease).

1) Mileage is critical. Going over a bit can be ok, but going way over can leave you with a large bill at the end.

2) Condition is critical. If you normally trash your cars, you'll pay for that as well (plus you'll probably rot in hell).

3) Getting out early is always going to cost you a bundle, don't do it if you can stick with the term. (not as bad as " 'til death do us part", but can be as expensive).

4) Planning to purchase at the end (of eiather lease or smart buy) is usually poor planning. You'll end up paying way more than if you finance for a longer term. Just plan on driving and dumping.


I believe this will qualify as my longest post ever on here, but since I felt personally attacked, I feel much better about it.

My best advice: do whatever you have to do to get the H3. I'm loving mine and still grin every time I get in it.

Good luck!

[Jackwins]

For me, Smartbuy or Lease is the only way to go. I like new cars too much, Ive had my H3 for 3 months and am already looking forward to the new 2009-2010 vehicles(damn car show).

[Dani]

I'm taking a HUGE loss on my trade in. I have an '06 Honda Pilot that I still owe about $35k on (I've had it less than 3 months) just so I can get the H3. The hit is about $10k...we were debating weather to just buy the H3 outright, lease it or do the SmartBuy.

After reading this thread I'm really not sure what the best way to go is lol.....I'm a little confused

[Rick]

If you are $10k upsidedown... You'll lose no matter what you do if you trade after 3 months. You'll need to stay in it for minimum 18 - 24 months or take the hit.

You could try selling the Pilot on your own... That would lessen the loss.

[ETD]

Sheeet! So much for taking it back the way I bought it http://elcova.com/groupee/forums/a/t...5/m/5181065771

[Ken06H3]

If go with a SmartBuy or lease, you really should consider GAP Insurance. It will take care of the difference between your insurance and the balance due on the vehicle if it's totaled.

[Rick]

You should always buy GAP insurance regardless if you lease or buy... Unless you put A LOT of money down. They you will always be in an equity position anyway.

You don't have to buy GAP from the dealer. They pay anywhere from $130 to $220 for each policy and sell it for up to $600. (Lenders won't finance more than that!) So... It may be cheaper to get it through your own ins. co.

Just my .02

[HoKC]

Extra .02 worth for those that are upside down in their trade.

A Smartlease or Smartbuy is a good way to get out from under that inequity. It has allowed us to place customers in vehicles that they would not normally be able to buy because the payments are lower. They also have the advantage of allowing you to be totally out from under that inequity in a shorter period of time (24-48 mo.) as compared to a purchase where you are dragging all that inequity for up to 72 mo. and paying interest on it the whole time.

[Dani]

I decided to purchase it outright instead of leasing/smartbuy. i can't wait to get it!

[Rick]

Dani... Regardless of how you intend to pay for it... You are going to LOVE IT!

Good luck!

[Dani]

I'm picking my new H3 up tomorrow! I'm so excited!!! Today will surely be the longest day of my life

[HummerNewbie]

Congrats. What did you get?

Today will be long but tomorrow will be even longer. Post some pics when you get it.

[Dani]

Originally posted by HummerNewbie:
Congrats. What did you get?

Today will be long but tomorrow will be even longer. Post some pics when you get it.

I got a black base with sunroof, chrome appearance package, chrome fuel door, XM radio and the upgraded to the monsoon sound system. I didn't want the chrome appearance package but the hubby did so we had to get it. I told him it wasn't fair because I wanted leather and he didn't....it's my car so he shouldn't count. Yeah that didn't go over real well lol

[HummerNewbie]

Originally posted by Dani:
I got a black base with sunroof, chrome appearance package, chrome fuel door, XM radio and the upgraded to the monsoon sound system. I didn't want the chrome appearance package but the hubby did so we had to get it. I told him it wasn't fair because I wanted leather and he didn't....it's my car so he shouldn't count. Yeah that didn't go over real well lol

Congrats, hope the day goes by fast. When are your picking it up?

[Agriv8r]

Originally posted by HummerNewbie:
<BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content">Originally posted by usetosellhummer:
God forbit you off-road it on a smart buy and try to turn it in and walk away. Smart buys are for stupid people.

Just curious, since a smart buy sounds identical to a lease, is it worse than a lease? </div></BLOCKQUOTE>
The big difference between a "Smartbuy" and a "Lease" is that the smartbuy is titled in the customer name and the lease is titled in the "Bank/lender" name in care of the customer. In Va the advantage of this is that military people do not have to pay personal property tax on a smartbuy, but they do in a lease. There are other minor differences.

Dani - congrats on the new H3. Glad you could make a crisp decision despite all the pontification on how to purchase it on this thread.

Enjoy your new rig.

S.

[Dani]

I picked up my H3 yesterday! I will post pics tomorrow on my day off

[Rick]

Originally posted by Dani:
I picked up my H3 yesterday! I will post pics tomorrow on my day off

And? And? Do you love it? Is it everything you wanted?