Be sure to read all the fine print and check out your other options before signing
Years ago my sister-in-law's three children were fighting over a single balloon. After half a day of bickering, she became so frustrated with trying to mediate 'balloon time' that she took the Mickey 'n Minnie balloon and smashed it against a coat hook. The resulting pop startled all of us, there was a moment of silence and then the two girls ran off crying. The boy, however, walked towards the lifeless body of the balloon, picked it up, and caressed it: "The balloon" he whimpered softly. Well, you'll be whimpering too if you buy into smart's $99 cash for clunkers deal which uses the maximum $4,500 incentive as your down payment and then requires you to pay $99 for 36 months. It all sounds good so far, yes? Here's where the balloon comes in, at the end of the 36 months you are required to write a wallet choking check for $6,667 as a balloon payment and unlike the kids who received ice cream treats to smooth things over, you'll be all on your own. While the offer states no cash out of pocket at signing, the payments don't allow for tax, title and license, so you'll be forking that over either initially or monthly to cover those expenses. The underlying interest rate for this deal is 5.9 percent which is worse than the 4.2 percent promotion that smart had offered.
Searching around on the Internet, I quickly found a credit union that was offering 3.99 percent for up to 60 months for a new car loan, which easily defeats these offers. Using the quoted MSRP (inc destination) of $13,335. We subtract out the clunker allowance of $4,500 for a total financed of $8,835. At 3.99 percent for 36 months you will pay approximately $261 a month or if you take it to 48 months (max term allowed by this credit union for $8,835) it would be $199 per month. Either way you aren't left with a monster payment at the end of 36 months.
This 'smart' deal seems to be designed to grab your attention, not save you money.