By Christopher Jackson
Manufacturers are looking for ways to keep you in your fresh new ride if you lose your source of income.
Credit concerns and a falling economy led quickly to a collapse in car sales, as consumers wisely delayed new-car purchases in the face of an uncertain job market. There’s nothing worse than committing yourself to a new-car payment and then losing your job, after all. The rapid depreciation of new cars can make it nearly impossible to get out from under a loan you can no longer afford, and savvy car shoppers are staying away.
To entice buyers back into the showrooms, Ford, Hyundai and General Motors have introduced buyer-protection programs intended to boost customer confidence and get folks back into the showrooms. What kind of protection is being offered? Well, if you lose your job, you can get help paying for or return that new car you can no longer afford, with no penalties or consequences.
That’s the broad view. While generally similar, there are differences between the Ford, Hyundai and GM plans. On Wheels has laid out the details of the manufacturer buyback plans.
So, you’ve purchased your new car, and now you’ve lost your source of income. What happens next? Well, Ford’s Ford Advantage plan has the payment for your new Ford, Lincoln or Mercury covered for up to $700 a month for up to twelve months. This plan is applicable up to a year after purchase, and is available to anyone who purchases a qualifying product through June 2009 and has made at least one car payment. Claims for coverage after loss of income can be made through this December.
If you still haven’t gotten back on your feet after the twelve-month grace period expires, however, you’re on your own.
If your car is a Hyundai and you lose your job a year or less after you’ve purchased it, the manufacturer will chip in up to three months of car payments, provided you’ve made the first two payments yourself. Unlike Ford, Hyundai steps in after only three months, and if you’re still in financial freefall at that point, it will take the car back, covering up to $7500 worth of depreciation including what’s already been spent in payments. Hyundai’s plan seems to be open-ended, as they have not announced a cutoff date for benefits.
General Motors’ “GM Total Confidence” plan is available for up to two years after purchase, though the cutoff date was the end of April 2009. Still, if you’re making payments on a new Chevrolet, Buick, Pontiac, Cadillac, Hummer, Saturn or GMC product and lose your source of income, the General will cover up to nine months of payments up to $500. Like Ford, GM doesn’t offer to buy your car back when the grace period expires.
The GM Total Confidence program does offer depreciation coverage, however. After you’ve owned the vehicle for at least half of its loan period, if it’s worth less than you owe on it, GM will cover the difference if you trade it for a new GM product. GM offers up to $5000 on trade-ins and $2500 on private sales (provided you purchase a new GM vehicle within seven days).
So are these plans worth it? Well, since there are no additional fees charged for these plans, and they don’t have a negative effect on the value of the cars covered, they do offer an advantage over “cash on the hood” rebates. That said, Ford, GM and Hyundai won’t help you out if you pick up a loan for a car that you simply can’t afford. The primary aim of these plans is to boost consumer confidence in an uncertain job market. It’s worth looking into, but no manufacturer-offered incentive beats careful financial planning.