Payday Loans

Ford announced today a new program designed to encourage would-be buyers to step up and buy.  The Ford Advantage Plan will cover payments (up to $700) for up to 12 months on any new Ford, Lincoln or Mercury vehicle if customers lose their jobs.  The program runs through June 1, and is addition to other incentive programs available.

Not to be outdone, General Motors unveiled its own version, called GM Total Confidence.  GM’s plan covers you for 24 months of ownership, but has a maximum of 9 payments of up to $500 each.  GM’s plan also has “Vehicle Value Protection” which protects the residual value of the vehicle starting when you are halfway through your finance contract.  If your outstanding loan balance (when you buy a new GM product) is more than the NADA Clean Retail Value, GM will provide “negative equity assistance,” meaning that GM will cover you for the difference up to $5000 on a trade-in, or $2500 on a sale.  GM Total Confidence also runs through June 1.

Why the sudden interest in protecting buyers?  Two reasons.  First is that buyers are staying out of the vehicle market out of fear that they might lose their job due to the economy.  With these programs, GM and Ford hope to quell that fear. The second is that Hyundai began offering this same basic idea a few months ago.  Not coincidentally, Hyundai is one of only 2 manufacturers that have posted higher sales in 2009 so far (Subaru is the other one, but that is only because they have a new version of the Forester, their biggest seller.  All of their other models are down). Ford and GM obviously saw this and decided it is worth a try as well. Will it work? Probably, but perhaps not as well as Hyundai’s.  Hyundai has the advantage of being a (relatively) healthy company that is not caught up in the specter of bankruptcy, government loans, etc.

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