Will GM Really Give Me a Refund?

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Unless you’re a contestant on “Survivor,” or are cut off from the world some other way, you’re sure to have seen the weekend’s ads for a new money-back guarantee on vehicles from General Motors (Stock Quote: GM).

No-questions-asked refund policies are so common with other products, and so rare-to-non-existent with cars and trucks, you wonder whether there must be a catch. Otherwise car makers would have been doing this all along.

A close look at the details of GM’s new policy does reveal some fine print, but none of it surprising. GM would be crazy to launch such a program, with such extensive advertising, if it didn’t really intend to make good on its offer. The program is what it appears to be: a desperate effort by a troubled car maker to boost sales.

So, is it a good deal?

It looks like it is, but shoppers should think about a few issues before racing out to buy a new Chevy, Buick, GMC or Cadillac.

First is something economists call “opportunity cost,” which refers to what you pass up by choosing one option over others.

GM requires that you keep the new vehicle for at least 30 days, then gives you another 30 days to return it. That’s fine so long as you don’t miss the opportunity to buy another vehicle you’d prefer. This is the season for year-end sales, as dealers clear out 2009 models to make room for the 2010s. Many of the good deals will be gone in 60 days.

Second, the refund program should not be seen as a reason to favor a GM vehicle, or to haggle less rigorously on price, accessories and other terms. The program does not add any value to a vehicle that’s kept past the 60-day deadline.

Before buying, look at alternatives from Ford (Stock Qutoe: F), Toyota (Stock Quote: TM), Honda (Stock Quote: HMC) or any other car maker that offers vehicles in the category you want. And use the BankingMyWay.com Shopping Tool to find the best car loan, rather than immediately accepting the dealer’s financing offer. Use the Auto Loan Calculator to evaluate terms.

Third, keep in mind GM’s “buyback price,” or the amount it will pay for a returned vehicle, does not refund licensing, titling and registration fees, delivery and insurance costs, or the cost of accessories you have the dealer install. These could total hundreds and thousands of dollars.

The deal applies only to purchases, not leases, and it is void if you put more than 4,000 miles on the vehicle or do more than $200 worth of damage, even if it’s been repaired. Of course, you won’t be able to get back any vehicle you had traded in.

Look at the GM site for all the details.

Finally, note that you can get a $500 credit on the purchase price by waiving your right to return the vehicle. Unless you’re really concerned that you won’t like your new car or truck, this is probably the best option. In other words, you pay $500 for the right to return the vehicle if you don’t like it.

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.

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