It came from here: http://www.carbuyingtips.com/car3.htmGM's "Smart Buy" Program
It's really a dumb lease!
Salespeople know the word "lease" reminds us of bad memories and scams in the mid 90's so the brilliant marketers at GM have relabeled it, disguising leases with the name "Smart Buy". It's sort of a purchase, and sort of a lease. Salespeople tell you that YOU own the car, your monthly payments are less and you can buy the car in the end for a balloon payment. I'm sorry folks, that's a lease with a purchase option at the end. They don't tell you the balloon payment may be more than fair market value because they artificially inflate the residual value to make your monthly payments less. Balloon payments are risky, what if you don't have the cash at the end? Even GM's website places a veil over the lease telling us that that Smart Buy "enables you to own your vehicle and lower your monthly payments. The low payment is possible because each month you pay for the portion of the vehicle you expect to use." Leasing is fine if that's what you want, but our visitors have been tricked into thinking they are "buying". If you don't buy the car at the end, you pay a $250 disposition fee. Why don't they just call it a lease?
I don't recommend balloon payments! No one is ready for them when they come due.