Ally Financial recently launched an innovative auto purchase financing product that offers customers the flexibility of a lease with the benefits of a purchase agreement. 

The new product, called Buyer’s Choice, offers customers the “best of both worlds…of both buying and leasing.” When a customer buys a car using Buyer’s Choice, they get a “fixed rate and payment with the option to sell it to Ally at the 48th month of their contract, at a pre-determined price.”

Offers Flexibility to Uncertain Customers

The pre-determined price is based on the residual value of the vehicle after 48 months, which is typically about one third of a car’s MSRP.

Should customers decide they want to continue owning the car, they can continue to make payments as scheduled. Buyer’s Choice offers loans ranging from 60 to 84 months in length. Ally only buys back after the 48th month, however.

Initially, the product will be available in the nation’s five most populous states: California, Florida, Illinois, New York, and Texas. Ally promises that the program will expand to new markets over the next year. The loan option will be available on Chryslers and General Motors cars only. Ally used to be GMAC, and was owned by General Motors. Now the federal government owns the most equity in the company.

The Buyer’s Choice program appears to be an update of GMAC’s SmartBuy program, which had similar structure, but involved a balloon payment at the end of the lease term should customers want to purchase the vehicle. Side-by-side, the Buyer’s Choice program is considerably more attractive a financing option. Unlike SmartBuy, Buyer’s Choice has no high one-time costs.

There Are Some Extra Costs

The Buyer’s Choice program offers customers some additional flexibility, but it does come at a premium. On a traditional lease, customers pay sales tax only on the depreciation of the vehicle (the difference between the car’s value at lease signing and when the vehicle is returned to the dealership); on lease of this sort, where the lessee’s name is on the title, the sales tax on the whole purchase price of the car is lumped into the principal.

For customers who like leasing cars, it makes sense to stick with what they know. But for customers who don’t know exactly what the future holds for them, Buyer’s Choice offers some wiggle room.

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  • Sun W. Kim

    Or you just could buy a reliable used car like a Toyota or Honda. 

    Ally Bank (formerly GMAC) still has not paid back its TARP funds. Why would I want to give them any more of my money. If you can’t pay back the TARP funds, maybe Ally Bank should go out of business.

    • All Ameican Boy

      Lets feed the other countries Sun and forget about ours. We all cant work at Mcdonalds

      • Sun W. Kim

        I don’t have any blind allegiance to the USA or foreign made cars. The fanboy attitude of buy “Made In USA” is not as clear cut because many foreign brands are made in the USA. I’ll buy the car that provides the best value and reliability.

        • Gwilliams7

          Exactly…you only have control over yourself…..you can’t do anything about what others control.   We can’t make effective change….we gave that up….CNN and Fox will just have to be our guides

      • Gwilliams7

        We made that choice years ago when we decided that we were too good to actually build something here.  We were all going to be doctors, lawyers, accountants and vacationers and let the underlings of the world do the actual building.   Now we pay the price for our unfunded and unfounded largess!!

    • Gwilliams7

      Because you can only control your finances.  You have so control over TARP or Ally so just do what is best for you.  Besides….the TARP money is most likely your great great great grandchildrens money.