Monday, April 06, 2009


Desperate economic times make for desperate sales and advertising tactics and that’s what we are seeing today with the promise that you “don’t have to worry about losing your job” if you buy a new car.

First you heard about this from Hyundai. About three months ago they began advertising that if you buy a new Hyundai and then you lose your job and can’t make the payments…NO PROBLEM! Guess what? It worked! Hyundai sales rose 20% while all other car manufacturers’ sales are plummeting. Seeing this, AutoNation, the largest publicly owned car dealer group in the USA, jumped on the bandwagon [In Florida, AutoNation chose to name most of their dealerships “Maroone”. I guess there’s a certain stigma associated with public companies vs. locally owned]. Not to be outdone, GM and Ford joined the party recently. If Hyundai can fool that many people, maybe we can too!

I contacted the Texas company that was underwriting the payment protection plan for Hyundai. I found out that this was nothing new, the company had been peddling this “get ‘em in the door” scam to car dealers for years. What they have been selling and what they sold Hyundai is like an insurance policy. But, it’s not an insurance policy. It’s kind of like those “credit default swaps” you’ve been reading about so much lately. They should be regulated but they are not. Hyundai, AutoNation, GM, and Chrysler are paying a “premium” for the highly unlikely event that one of their car buyers loses her job. This cost is included in the price of every car they sell, even for those buyers who have no concern about losing their job. Maybe they’re retired! Maybe they paid cash for the car! That’s just one more thing that stinks about this ruse. Every by buyer, whether they need or want payment protection, is subsidizing, by the higher price they pay for the car, those who think they need job loss protection.

There’s a lot more wrong with this deceptive promise of guarding you against job loss. Even though it does not qualify as an insurance product, it is underwritten just like it was. As you hear repeated so often these days…”The devil is in the details”. I went to the General Motors Web site which was advertising their payment protection plan and finally got to the “devil and his details”…SEVEN pages of fine print! It was worse than reading a health or life insurance policy. This column doesn’t have space for me to list and explain all of the exclusions, qualifications, and other loopholes. I can best explain it this way. You have heard the insurance term “pre-existing condition”. That means that if you have a particular illness, your health insurance or life insurance policy does not cover you. Well, if you are in danger of losing your job, your chances of having Hyundai, GM, or Ford take care of your car payments if you do lose it are slim and none.

This advertisement is very similar to the ads you have seen and heard that tell you that you can buy a car even though you have bad or no credit. These ads exploit car buyers’ fears. Often times prospective car buyers have exaggerated negative feelings about their credit status. Even in today’s economy, a few people with low Beacon scores can qualify a large down payment and are willing to pay a very high interest rate. Or, the dealers will sell the person a cheap used car for cash down payment she saved. The problem is that for every person with bad credit that can buy a car, the ads bring in at least 25 more that are disappointed and embarrassed when they can’t qualify. A lot of car dealers won’t even show you a car until they run a credit check on you. They don’t want to “waste their time”. This kind of advertising is like casting a net to catch fish. You catch lots of fish with every cast, but only a small percentage of “keepers”. In my opinion, this kind of advertising is unconscionable.


  1. Earl, I don't see the problem here. We are all in this together, and there is nothing wrong with asking successful people like you and me to pay a little more. This great country was built not just on the hard work and enterprise of our forebears, but on their charity and sense of fairness as well.

  2. Oh, forgot to mention: I LOVE your blog. Please check mine out at

  3. This article reminds me of this quote, "Seasonal unemployment was found to be a state which does not have much employment, for example, rural areas."

    But there are career experts who conduct seminars giving advice about the needed skills to compete in today's competitive job market.

  4. I have a hard time believing that you know everything. How do you know that they hide the price of the premium in the price of the car? What proof do you have that the add this to the price of the vehicle for everyone that buys a car from them. If I were these companies I would demand you show me the proof or I would sue you butt off.

  5. I just found this blog because I saw the good old propoganda "put on your rally cap" GM commercial that claims they will make your payments and secure the value of your vehicle.

    When I googled payment protection job loss GM this was the first article that came up.

    Whether or not this guy's facts are 100% correct or not has no affect on the true message of the post. However you add it up its a scam with more loop holes than your life insurance policy.

    Use common sense people. Remember the saying "If it sounds too good to be true it probably is."

  6. Be aware that HSBC also has payment protection scam operating;
    inpossible to qualify for it,,, apperantly their policy is to deny benefits until you die, give up or get back on your feet.
    I own a hyuandi but I would not trust them anymore than I do GM to come thru on the promises.


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