Here's an interesting move by Hyundai: if you lose your job within one year of buying a new car, they'll let you return it and wipe out up to $7500 of negative equity.
According to a Hyundai press release, buyers can return a vehicle for no additional charge within 12 months of purchase if any of the following occur:
-- Involuntary unemployment
-- Physical disability
-- Loss of driver’s license for medical reasons
-- Job transfer overseas
-- Personal bankruptcy filing by a self-employed worker
-- Accidental death ...
Here’s an example from Schwartz of how the return program works:
A customer buys a 2008 Santa Fe SUV and gets a five-year loan for the total purchase price of $22,300 (including rebates, taxes etc.). About $350 of the $430 monthly payment goes toward paying the principal on the loan. When they buyer loses his job nine months later and returns the vehicle to Hyundai, he’s paid about $3,200 in principal on the loan and still owes $19,100.
Assuming the used Santa Fe is appraised at $16,000, the buyer would be “under water” on his loan by $3,100 — easily within the $7,500 negative-equity threshold provided by Hyundai.
As a buyer, I think I'd rather have a lower interest rate or a larger rebate instead of this insurance-like program. Won't this offer attract customers who are particularly likely to lose their jobs? Or troops who might be deployed overseas?