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In these hard economic times, there is no doubt that most of us are struggling, as are the automotive companies themselves. Right now, if I were to bring up the phrase “automotive industry,” most of us would probably think government bailouts, bankruptcy, failure, etc., but the automotive industry is trying something rather new and unique to help stem the distressful financial tide: financial assurance programs. You cannot channel surf too long without seeing a commercial advertising a car company’s assurance program and, chances are, most of us think that they are too good to be true. Oddly enough, they are not; these programs are real. But, as always, it is vital to read the fine print. Let’s take a look at some companies and their programs.
General Motors
GM’s Payment Protection program offers buyers up to nine months of payments (up to $500) just in case they lose their job within the first two years of ownership. In order to qualify for the protection one needs to purchase a 2008 to 2010 vehicle between April 1, 2009 and August 30, 2009. If you were recently laid off, you need to show proof that you worked 30 hours a week for twelve consecutive weeks before you lost your job. If you buy a vehicle now, you need to have worked at least 30 hours a week for three months before you lose your job in order to be eligible. A buyer is only covered if they are laid off, not fired. Unfortunately, GM employees are not eligible for the payment protection service, nor are seasonal workers, self-employed individuals, retirees or individuals receiving a severance package. It does not matter if you leased or financed either, nor does it matter who financed your purchase. Not all vehicles are covered under GM’s Payment Protection program, so if you think that it may be a possibility that you will have to utilize the program, ensure the vehicle you want is covered. Check out this link for specific questions and answers.
Hyundai
The South Korean auto giant Hyundai was a trendsetter when they announced their Hyundai Assurance program earlier this year. Hyundai’s program, much like GM’s, applies to every new auto leased or financed through any financial institution from January to May. Unlike GM’s program though, Hyundai’s covers a variety of circumstances, including unemployment. Other circumstances covered include physical disability, loss of driver’s license due to a medical impairment, international employment transfer, self-employed personal bankruptcy and accidental death. In case of any of these circumstances, the buyer will be covered for three months by the company. If for some reason the situation cannot be rectified, Hyundai gives you the option of returning the vehicle. In order to do so, one must be current on their payments and have made two scheduled payments. Before anything else can happen, you must bring the vehicle to the dealership where you bought it to have it appraised. The best part of the plan is that Hyundai offers negative equity coverage up to $7500 (USD). If your vehicle has not depreciated beyond $7500 (USD), you are good to go. If it has, you have to pay the difference. If all goes well, Hyundai claims that this will have absolutely no impact on your credit score.
Ford
Ford Motor Company kicked off its Ford Advantage Plan (FAP) on March 31 and it will run through June 1. Like GM’s plan, Ford’s is fairly straightforward with no negative equity insurance. If a buyer has lost their job after purchasing a new Ford vehicle and has been on time with payments, Ford will offer up to $700 per month for one year before any negative consequences occur on your credit. This deal applies to any new Ford, Lincoln or Mercury vehicle. Furthermore, Ford is the only company offering zero percent APR on select vehicles covered under the program.
More Companies To Come?
Right now these are the only three companies that are offering this sort of financial assurance for the consumer (with more to come, surely). Obviously, the goal of these programs is to help the struggling auto industry stay afloat a bit longer or at least until economic conditions improve. That is to say, if more people can hang onto their autos in tough times, the automotive industry is going to profit on them in the end. If more auto companies were to pursue financial assistance policies like these, what should they be modelled after? Hyundai’s, Ford’s or GM’s?
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