A company by the name of Walkaway is behind the highly successful Hyundai Assurance Plan that could add a great deal of peace of mind to many bad credit car loan buyers.
Insuring your success
At Auto Net Financial, we believe that any product that helps bad credit auto loan customers by giving them more peace of mind during the process of reestablishing their credit and raising their credit scores should certainly be considered, even if it increases the monthly car payment.
In this regard, we have clearly stated in the past that when purchasing a new or used car, there are many dealer back-end products that are a waste of your hard-earned money. We count among these offerings such things as paint glazing, window glass etching and fabric protection products. Rust protection is a waste because it could very well void your new car warranty. In addition, if you find that you can’t make do without the other three, you can do them all, yourself, at a fraction of the cost the dealer would charge you.
But in all fairness, there are a number of additional services that just might end up saving you money in the long run if you are financing a vehicle with a bad credit car loan. The two products that come to mind are service contracts and gap protection. Service contracts can save you from potentially ruinous expenses; in particular, if you are buying a used car. Gap protection, on the other hand, can be especially useful when you are financing a new car.
It fills the gap
Currently found in most new vehicle leases, gap coverage is essentially an insurance product. It’s designed to make up the difference between what a vehicle is worth on the wholesale market (as determined by your insurance company) and the actual amount that is owed on the lease contract at the time of an accident in the event the leased vehicle is written off as a total loss. This type of coverage is especially important in a lease, because the consumer leasing the vehicle is rarely in an equity position – leases are designed so that, at least in theory, the vehicle is worth its residual value only at the end of the lease.
But with the advent of longer finance terms and lower down payments – even with bad credit auto loans – gap insurance for retail financed vehicles is making more and more sense, especially given the recent volatility of the used car market.
A case in point is the sport utility vehicle. If you bought one of these two years ago with little or no money down on a 72 or 84 month finance contract (or even 60 months, in many cases) and it was stolen or declared a total loss in an accident, you could very well have been in big trouble. Insurance policies are usually written to cover the loss of a vehicle up to its current value, less any deductible amount (depending on the laws of your state). And if you remember last summer’s precipitous drop in SUV values, you can see where a total loss could leave you holding the bag for thousands of dollars in negative equity that would still have to be paid back to the bank. With GAP insurance, however, that “difference” amount would’ve been covered and the amount you paid for this coverage would be small in comparison.
So you can see the advantages of gap insurance.
Hyundai assurance
But what if some other event, other than an accident or theft, renders you unable to cover that difference in negative equity? Given current economic conditions, it would also help if you could find additional coverage that included such events as job loss, physical disability or loss of your driver’s license due to a medical impairment. It turns out that a company in Texas is currently offering such a product and both product and company are named Walkaway®.
If this gap package sounds familiar, that may be because one of Walkaway’s biggest accounts is Hyundai. It turns out that the original “Hyundai Assurance Program” was Walkaway’s 12 month package that includes up to $7,500 in gap protection for 6 scenarios: involuntary unemployment (permanent release), physical disability (with a 60 day waiting period), loss of driver’s license, international employment (permanent for 24 months or longer), self-employed personal bankruptcy and accidental death.
Hyundai later amended their program to include a variation of Walkaway’s “Full Term” plan that adds 90 days of loan or lease payments in the event of physical disability or involuntary unemployment. This program ended on April 30, 2009.
Walkaway
Originally established in Toronto, Canada in 2000, the U.S. division was established in 2007. According to the company, “Walkaway is the only Vehicle Return Program that protects consumers from financial shortfalls arising from the depreciation of new and used vehicles (negative equity) available only through Authorized Walkaway Lenders.”
In addition to the initial program offered by Hyundai that covers the first 12 months (without the 90 day payment provision), the company offers:
• A full term plan that covers negative equity in sales contracts of up to 84 months
• A full term with payment relief (up to 90 days) that covers sales contracts up to 84 months
• A full term $15,000 plan that covers negative equity of up to $15,000 for 84 months (with a maximum financed amount of $75,000)
• A full term $15,000 plan that covers $15k in negative equity and provides two 90-day payment benefit periods (for a total of 6 months) in the event of involuntary employment or physical or mental disability.
Dealers and banks
Other than Hyundai, the various programs are available through car and motorcycle dealers as well as banks and credit unions. Among the larger dealers participating in the program, the Rick Case group is probably the best known.
The Bottom Line
Here at Auto Net Financial, it seems like the time has come for creative gap programs like Walkaway, especially considering the continued economic uncertainty in much of the U.S.
