smart Financing Deals

More than 20 years ago, the first smart car was produced in Hambach, France. Love them or hate them, these little cars with big style have become recognizable as design icons. The name “smart” is a combination of Swatch, Mercedes and art — the car was a collaboration between the luxury carmaker and the founder of SMH, the Swiss company behind the Swatch watch.

Though the smart car represents just 5% of Mercedes-Benz’s overall sales, perhaps not helped by the fact that U.S. buyers are restricted to the electric smart EQ for two, it is still possible to find a dealer and finance a smart car through the manufacturer. We’ll walk you through the details, pros and cons, and lay out a few alternatives as well.  

smart financing in a nutshell

  • Financing terms up to 60 months
  • Apply online or at the dealership

The smart company is part of Daimler AG, the parent company of Daimler Financial Services, which offers financing through Mercedes-Benz Financial Services (MBFS). Manufacturer financing is provided by MBFS, whether you apply at the dealership or online.

It’s worth noting that it may be difficult to find a wide inventory of smart cars on the lot. You probably won’t find a smart-only dealership in your area — in many places, they’re attached to Mercedes dealerships.

When it’s time to discuss financing of your smart car, the APR offered will depend on your credit history, current rates, market conditions and special offers, according to MBFS. MBFS offers three different ways to get you behind the wheel of a smart car:

  • Finance: Loan terms to buy a smart car range from 24 to 60 months.
  • Balloon financing: Terms range from 24 to 48 months. Buyers who choose this method are trading smaller monthly payments for a lump sum “balloon” payment at the end of the contract. This option may not be available in all states.
  • Lease: Terms between 24 and 48 months. We’ll discuss leasing in more detail below.

smart financing rebates and incentives

The smart USA website offers several special offers on new and certified pre-owned vehicles, one of the biggest advantages of financing a vehicle through the manufacturer. It’s important to keep in mind that low APR or 0% APR deals you may see advertised are generally for those with the best credit and may not apply at the exact time you’re car shopping or to the exact model you’re seeking. We didn’t see any 0% deals at press time, but we did see:

Low APR deals: As of press time, 1.9% APR was offered on 2011-2016 certified pre-owned vehicles. Yes, CPOs are used cars, but smart says every CPO smart is inspected and guaranteed by the smart expert technicians.

Lease specials: Deals on new cars were restricted to lease specials, as of press time. We’ll discuss those in more detail below.

Tax credits:  Buyers of electric vehicles may be eligible for federal tax credits up to $7,500. The credit begins to phase out after a manufacturer has sold at least 200,000 qualifying vehicles. You can find the most recent cumulative and yearly numbers of electric vehicles sold on the IRS website. At press time, a range of smart vehicles were eligible for the full credit, according to the Department of Energy.

Your local dealer may advertise special rates or discounts. Always check nearby for your best available deals.

How to apply for financing through smart Financing

The first thing you should do before you apply for any credit is to look at your credit history and score, to avoid any negative surprises. You can check your credit score at LendingTree. If your score isn’t where you want it to be, you may save a significant amount of interest expense over the life of the loan by taking steps to improve your score before you apply for a loan. Remember, the higher your score, the lower your interest rate and expense.

Here are a few things to keep in mind when applying for credit with Mercedes-Benz Financial Services:

  • You may apply for credit online, before stepping foot onto the dealership lot.
  • You’ll need to provide: personal information such as name, address, and Social Security number, as well as details about your employment and income. This will involve a hard credit pull, which could affect your credit.
  • If you apply online between 8 a.m. and 5 p.m. EST, Monday through Friday, you should get a response within 24 hours. You are not obligated to take the loan, and your personal information is protected. Your application and credit decision will be shared with the smart dealer you specify.

You can also apply for smart financing while you are at your local dealer. If your dealer isn’t offering any special financing offers or rebates for the model you are interested in, you don’t have to take the first financing offer they make. You can negotiate your APR just like you would negotiate the price of the vehicle. You’re free to negotiate terms before or after your credit application is processed.

Remember, manufacturer financing isn’t the only way to get into a smart car. Even if you think you qualify for a low APR deal through Mercedes-Benz Financial Services, it’s a good idea to shop around. The more you know about your other financing options before you go to the dealer, the stronger your negotiating position. You could fill out one online form at LendingTree and receive up to five potential offers, from up to five different lenders based on your creditworthiness.

If your application through MBFS is not approved, don’t give up. MBFS recommends that you discuss your options with the dealer. You may qualify for financing on a different model or a pre-owned vehicle. In some cases, you may qualify for the original model you chose simply by submitting additional information to MBFS.

Leasing from smart Financing

Some car drivers love leasing their cars. The leasing structure generally makes it possible for them to get a newer, higher value car for the same — or lower — monthly payment. Plus, they can turn in the leased car at the end of the contract and move on to the next exciting new vehicle. At press time, smart offered several deals on leases for 2018 and 2019 models. Lease deals are not available in Puerto Rico.

There are a few other things to keep in mind when leasing:

  • Standard lease terms: 24, 36 and 48 months
  • Standard mileage limits: 10,000, 12,000 and 15,000
  • Mileage overage charge is 25 cents a mile

Leasing comes with several pros and cons, which we describe below, but smart car lease holders should expect to pay a $395 fee when they turn in their vehicles and pay fees if they exceeded mileage or wear-and-tear agreements. Choices at lease-end are to turn in the vehicle, turn it in and lease or buy another vehicle or buy your leased vehicle.

Consider these pros and cons of leasing versus buying your car:

Leasing a car:

  • Little or no down payment required (except capitalization cost reduction fee and acquisition fee)
  • Lower monthly payments
  • No equity buildup in the car
  • Ability to turn in your car and walk away at the end of the lease (after paying any fees, including excess wear and tear or mileage fees and vehicle turn-in fee)
  • Limits on modifications
  • Possible penalties for ending a lease early

Buying a car:

  • Potentially significant down payment
  • Generally higher payments until the car is paid off
  • Monthly payments help you build equity in your car, until you eventually own it free and clear
  • Rights (and responsibilities) of keeping or selling your car at any time
  • It’s your car — modify with non-factory accessories as you please
  • You can sell the car at any time, but you may be “upside down” on the loan at times

The Federal Reserve recommends that if you do lease a car, you try to match the length of your lease to your needs and preferences. You generally have lower monthly payments with a longer lease, but that advantage disappears if you need to end the lease early and incur substantial penalties and fees. The Federal Reserve offers more advice about leasing vehicles in its Keys to Vehicle Leasing publication.

You can compare financing, financing with a balloon payment, and leasing a car with the payment estimator on the smart website.

Alternatives to smart Financing

MBFS recommends that you shop around for other sources of financing, including banks and credit unions. If you have an established business relationship with a bank or other financial institution, you might want to see what they have to offer. You could get an idea of the best auto loan rates here.

More about  smart

From the beginning, the tiny car protected by a hard safety shell has been seen as an answer to urban traffic woes. A smart car isn’t much bigger than a bicycle, yet it can seat two to four people, depending on the model. It’s not only fuel efficient for commuters, but it can maneuver and fit into parking spots that bulkier cars have to pass by.

The efficiency will no doubt increase exponentially now that Daimler made the decision to convert all smart cars worldwide into electric vehicles. In the U.S., buyers are restricted to the all-electric two-door smart EQ for two, available as a coupe or convertible. The Pure coupe gets a combined 108 MPGe for about $24,000, making it one of the least expensive EVs on the market.

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