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AFAIK, that's right. Unlike a traditional lease, where you pay the sales tax on the leased portion of the car's value, a SmartLease-you've already paid the entire sales tax of the car upfront. So, if you SmartLeased a $20K car and then at the end of the term sold/returned it and bought a $30k car, you would only pay sales tax on difference ($10k). IIRC, this only works when you buy your next car. If you lease your next car, then you lose the tax advantage.
A SmartLease (or similar term) has monthly payments with a balloon payment (equivalent to the residual value) at the end of the term. At the end, you can either pay off the balloon (buy the car) or return the car. If you return the car and the car's value is less than the balloon, then you pay the diff and you're done. This scenario typically occurs if you put more mileage on the car than alloted (remember, it's like a lease), with the typical mileage penalties, etc.
If the car's value is more than the residual, you're better off selling it on your own prior to the balloon payment-pay off the ballon payment and make a little cash on the side. I don't know how it carries out if you just returned the car to the dealer if the car's value is higher than the residual. This scenario occurs if you have a low mileage, highly desirable car like an Accord (that holds its value).
I don't know how this would work with SAABs, as they typically do not hold their value well (hence, it's a great used car value). My guess is that you would have to really negotiate the residual and make sure that it's not overinflated so you're not screwed at the end.
Hopefully, someone on the board with more knowledge of the subject will carify what I'm saying. In general, I think this is correct.
Do your homework before you try Smartleasing. (DISCLAIMER-I will not be held responsible for blah blah blah blah blah.... ;-) )
posted by 155.58.23...
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