EFG Cos., the finance-and-insurance product provider that backed the Hyundai Assurance Program during the Great Recession, is relaunching its program that covers the negative equity of a vehicle returned because of an unexpected job loss.
The move is among many strategies auto finance companies are employing to generate dealership traffic in the months following the economic shock of the coronavirus. Auto lenders offering payment relief and aggressive finance deals also aim to bolster the lagging market.
The Walkaway vehicle-return protection product cancels up to $7,500 of negative equity in the event a customer needs to return a vehicle unexpectedly in the first 12 months. Upgrades to the product are available in certain markets contingent on lender participation.
The product offsets the depreciation cost of a new vehicle, which can prevent consumers from going underwater on car loans, says EFG Cos. CEO John Pappanastos.
“It’s not an F&I program. It’s intended to drive traffic to the showroom by offering the message, ‘We’ve got your back,’ ” Pappanastos said.
Since bringing the product to market in 2006, EFG says Walkaway has been sold on 826,750 vehicle purchases. Walkaway comes with 12 months of complimentary vehicle-return coverage. Similar to guaranteed-asset protection, EFG pays the balance of the loan. The difference is Walkaway doesn’t require an accident or other life event before a payout.
Though it premiered before that time, EFG’s product was selected as the backbone of the Hyundai Assurance program, which allowed customers to return a vehicle after an involuntary job loss.
Hyundai relaunched its Assurance job-loss protection program for new vehicles in March, but with a different company to provide the program. This time around, the program allows for six months of payment relief during the course of the calendar year. It applies to customers who buy or lease before April 30 through its captive financing arm, and it does not include the EFG product.
Since 2007, EFG says it has processed 947 Walkaway claims and paid out $3.9 million.
The product went live in three dealerships last week, though Pappanastos said the product likely will have more of an impact when the worst of the virus has subsided.
“I’d be a little hesitant to advertise into a market with all this COVID-19,” he said. “Consumers want to know when they can go to work again and eat in a restaurant. Those are more top of mind than when do I buy my next car.”