Purchasing a car is getting more and more difficult today with rising consumer prices. It is quite impossible to pay cash for a car, so it is essential to take up a loan for most people.
GMAC Financial Services is a subsidiary of General Motors Corporation. GMAC was conceived as a financial assistance program for auto dealers who needed to raise money to put a larger selection of automobiles on their lots. Later, GMAC moved into financing customers and help prospective auto owners to purchase a car that they can pay for at their convenience.
Over the years GMAC innovated, and today it offers the prospective car buyer the widest range of auto financing options. GMAC offers consumer finance in several areas, including businesses and brokers. Today, we shall cover only personal loans to purchase a car.
GMAC offers two basic types of personal loans
(i) GMAC Auto Loans for Vehicle Financing and
(ii) GMAC Auto Loans for Vehicle Leasing.
GMAC began the vehicle financing program in order to help consumers to "rent to own" a vehicle. This program was offered as traditional retail financing and SmartBuy.
In Traditional Financing, GMAC defines this as "an installment sale transaction between you and your dealer whereby you agree to pay the amount financed, plus an agreed upon finance charge, over a specific period of time." This is what you would normally expect when you purchase a car.
Prospective buyers should check the following guidelines to see if traditional retail financing fits them:
1. If you plan to drive your car for more than a few years and you consistently drive well over 15,000 miles a year.
2. If you plan to alter the vehicle. (repaint the vehicle, add new wheels, change the interior)
3. If the car you're financing is the one you plan to eventually own.
Although most people today finance their cars at GMAC, you can also finance at your bank or credit union too.
GMAC Auto Loans offers a second type of personal loans known as SmartBuy. SmartBuy allows you to own your vehicle with lower monthly payments. This is possible by deferring most payments until the end of your contract, This one lump sum payment at the end is known as the "balloon payment." The advantage of financing with SmartBuy is that you can simply return the vehicle and pay a smaller disposal fee if you do not wish to pay the balloon payment at the end of your contract. This disposal fee includes mileage and excess wear charges. Moreover, you could also choose to sell the the vehicle yourself at the price you choose. This allows you to make a profit if your selling price is above your outstanding loan balance. However, SmartBuy limits the usage of the car to 15,000 miles per year. If you expect to drive more, SmartBuy may not be right option.
For some people, purchasing a vehicle is best; for others it may be leasing. Auto leasing is defined by GMAC Auto Loans as "an agreement under which the vehicle owner (the lessor or your GM Dealer) permits its use by a customer (the lessee or you as the borrower) for an agreed upon period of time (the term)."
You do not have the option of owning your car in a vehicle leasing contract. Vehicle leasing monthly payments are usually less than vehicle financing since you are returning your car back when your leasing term expires. For the same monthly payment, this allows you to drive a better car than if you were to financing to own. If you plan to drive the same car for more than 2 years or wish to make alterations to your car, then leasing is not an option.
GMAC Auto Loans offers three leasing options:
(i) SmartLease
This is the standard leasing option from GMAC where you have monthly payments to cover the car's value, plus a rent charge, taxes and fees.
(ii) SmartLease Plus
This expands the lease to help you avoid monthly payments (contact GMAC for more information).
(iii) Low Mileage Lease.
This benefits those who drive under 12,000 miles per year with lower lease payments. However, before choosing this option you must make sure that you won't go over your 12,000 miles to avoid being charged for excess mileage.
You should speak to a GMAC dealership representative to get all of the facts about the car you wish to buy and the the loan loan you intend to have any commitments.
