GMAC loans and SmartBuy programs are retail finance contracts available to borrowers who are considering new General Motors products. Although a traditional GMAC loan and a SmartBuy are similar at the core, they do have some significant differences. Both are common because the loans are for a fixed term, at a fixed interest rate, with a fixed installment payment. GMAC loans and SmartBuy programs are normally offered to indivduals with excellent credit scores (FICO of above 700 in most cases). With GMAC, you have the benefits of working with a large lender who is directly connected to a manufacturer. Because of this link, GMAC and General Motors share a common goal: selling more vehicles to as many new clients is possible. In turn, you can expect great terms, great customer service (both on the phone at 800-200-GMAC and online at www.gmacfs.com) and a great opportunity to further build your credit history.
A traditional GMAC loan is a retail installment contract. In such a contract, you pay a portion of the principal balance each month, in addition to a finance charge. A set number of payments are scheduled, and at the end of the contract, the principal and interest have been paid in full, leaving you as the outright owner of the vehicle.
A SmartBuy offers a little more flexibility. The amount financed is amortized over a ten year period. You make payments for a set period. After this period (for example, five years), 50% of the selling price is still owed. At this time, you can turn the vehicle in and pay a disposal fee, refinance the remaining balloon payment or pay off the balloon payment in full. A GMAC SmartBuy will offer lower monthly payments, but you must be prepared for the large balloon payment at the end, or refinance if you plan to keep the vehicle.