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O.C.-based automaker will let jobless return new cars

January 5th, 2009, 9:08 am · 6 Comments · posted by Jon Lansner

Korean automaker Hyundai, whose U.S. operations are HQ'd in Fountain Valley, is offering a new enticement to car shoppers -- not cheap loans or a rebate, rather protection against having a car payment if you lose your job. Here's the deal, says Hyundai's press release ...

The Hyundai Assurance Program, the first of its kind for an automaker in the U.S. auto industry, allows consumers to walk away from a financing obligation when certain adverse life events occur, providing protection from financial shortfalls that arise from vehicle depreciation (negative equity) up to $7,500.

Detroit Auto Show Previews Newest Car Models

The Hyundai Assurance Program complements America's Best Warranty as standard protection on new vehicles financed or leased from a participating Hyundai dealer, and supplements all existing consumer incentives. The program is available to any consumer, regardless of age, health, employment history or financed amount of the vehicle. The program is complimentary for the first 12 months of the financing or lease date for vehicles financed through Hyundai Motor Finance Company and other third-party lenders and financing sources. Covered circumstances include:

  • Involuntary unemployment
  • Physical disability
  • Loss of driver's license due to medical impairment
  • International employment transfer
  • Self-employed personal bankruptcy
  • Accidental death

Consumers must have made at least two scheduled payments on their loan or lease, be current on all payments and pay for any outstanding balance above the $7,500 benefit amount which results from negative equity. Once the benefit is approved by the Hyundai Assurance administrator and the customer pays any outstanding balance, the customer returns the vehicle to the selling dealer, whose appraisal is factored into the valuation formula, and the consumer avoids further financial obligation or negative impact to his/her credit. The dealer is then able to remarket the vehicle.

More info IS HERE!

Other noteworthy economic twists ...

Coming soon: Auto Editor Matt Degen's car blog Auto Motion or send auto news to Mdegen@ocregister.com

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 6 Comments

  • Cliff says:
    January 5, 2009 at 3:33 pm

    WOW thats cool!

  • SH says:
    January 5, 2009 at 3:44 pm

    Basically they are purchasing a credit insurance policy on you and if you default and return the vehicle they win twice. One they get paid the insurance to cover the re-carry costs and two they resell the vehicle again. They don't lose money because you have to make that up-front $7,500 payment to cover any immediate or short term depreciation and they will make that and a profit when they resell it is previously owned. Smart maketing and finance on their end. You are better off negotiating a discount to cover the cost of purchasing a credit policy yourself and doing just that, because if any of the above stuff happens to you, all your payments will be made anyhow and guess what, you still have a car to get around in and still own it.

  • Lupethe3rd says:
    January 5, 2009 at 4:10 pm

    SH has it correct. This is just a new way of selling and gaining control over purchaser rights. It is just really good language on a scheme to make you think you are getting a good deal, when in all actuality, the buyer is really taking on all the risk. Great explanation SH, I'm glad some people out there are aware and keeping their eyes and ears open and buying into the hype.

  • Hmm says:
    January 5, 2009 at 5:54 pm

    I'm not sure that's right. They may be buying the insurance policy, and that is probably factored into their pricing. But, I don't see any requirement to pay $7,500. (Querry whether $7,500 is enough to cover depreciation of, say, one year if you have something come up.)

    Where are these credit policies you mention? How expensive are they? Do you think they were able to work out a better deal by insuring everyone rather than individuals?

    It isn't free to the consumer, but it doesn't seem like empty marketing either. It seems like this could have real value to someone who wants a new car, and could afford one if they have their job in the future, but are afraid of layoffs.

  • james says:
    January 5, 2009 at 6:06 pm

    there are no free lunches,or"deals" for Hyundai its a win win situation

  • QD says:
    January 6, 2009 at 8:55 am

    SH has it wrong. If you carefully read the conditions in the article, Hyundai will pay up to $7500 of depreciation in the first year.

    So, if you buy one of their expensive models, and it depreciates more than $7500 in the first year, you have to pay the difference if you lose your job. The catch is that the dealer determines the depreciation. We all know how "honest" dealers can be, so I expect a class action lawsuit sometime in 2010.

    Considering that their top model is around $35K, that would represent a 21% depreciation.

    Now, if the economy sinks a lot, and the depreciation is greater than $7500, the buyer is responsible for the rest. This is probably the argument that the defense lawyer would focus on.