By Paul Batista
Instant Wheels Editor

Are you willing to bet you will fail on your next new car purchase?

This program is branded as Hyundai Assurance. In reality, it’s being executed through a company called Walkaway USA, LLC, a wholly-owned subsidiary of EFG Companies, underwritten by the Great American Insurance Group, a member of the American Financial Group. They proudly state on their website (www.walkawayusa.com) that they’ve “allowed customers of Authorized Retailers to walk away from more than $31,961,792.74 in automotive loan and lease obligations since inception in January of 2000.”

According to Hyundai Motor America, Hyundai Assurance is a “complimentary vehicle return program for the first year on every new Hyundai that is financed or leased for owners who experience an involuntary loss of income within 12 months of the purchase date.” Translation: Walk away from your car if you hit an unforeseen hiccup in life. It supposedly covers everything from involuntary loss of employment to a physical disability to an accidental death. And it won’t affect your credit, either.

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The catch? Well, there are a few. They only cover up to $7,500 of negative equity, which is the difference between the vehicle’s wholesale value and its loan balance. And you have to at least make two scheduled payments on the loan or lease. And after you submit a request to hand the car back (aka “benefit request”) it could take up to 35 days to process it. So in reality, this offer is only good for 9 months. And on top of that, the dealer will appraise the car, so you’re at their mercy.

Getting back to that whole negative-equity issue, according to www.safecarguide.com, “New vehicles lose an average of 20% of their value the instant they are driven away from the dealership. When coupled to the average yearly depreciation (of a used car) of 7% to 12%, your first year’s loss is anywhere from 25% to 35%. That translates to a first year $6,000 to $8,000 loss on a $22,500 new vehicle, or a $10,000 to $15,000 loss on a $40,000 one. And that’s for a vehicle only driven the average 13,500 miles. If you drive more than that, your depreciation will be greater (35% to 50% for the first year). Don’t forget to factor in your financing, which will add another $1000 to $3000.” Translation again: If you’re the average American who is buying an average 2009 Hyundai Sonata GLS V6 for $22,450, which falls smack-dab in the middle of the available Sonata configurations, chances are you might be paying Hyundai some extra dough to give back your almost-new Sonata.

What does this mean for Hyundai, which has tagged this program as “Protection from the Economy”? Well, they’re not being generous for the heck of it. They are counting on the fact that you will be grazing right at the $7,500 line of negative equity when tragedy strikes. Again, they’re guaranteed to get 2 months of payments out of you, plus whatever you paid up front. It’s important to note that no refund is available on any of the money you already gave them. Regardless of whether they get more money out of you due to negative equity, it’s safe to assume they will re-sell your new Sonata to another buyer, in the form of a certified pre-owned vehicle with a remaining warranty, on which they will most likely make a profit. They’re selling your car twice — at your expense!

And the lesson to be learned in all of this? Outside of completely unforeseen circumstances, the American consumer should not be entering into a contract (which is what buying or leasing a new car is) without making sure they are fully able to uphold their end of the deal (i.e., making payments in full and on time.) And if upholding this contract isn’t likely to happen, maybe that consumer should buy a used car or a less-expensive car that can be obtained within their financial means. It’s no secret the economy is shaky and will continue to be shaky for a little while. So plan ahead! Don’t rely on your vehicle manufacturer to bail you out. (The fact that I had to write the previous line is absurd.)

The Hyundai Assurance Program is a thinly-veiled escape hatch for consumers who get in over their heads and expect an easy or quick way out. Some people will certainly see this concept as a life-saver thrown to them in the nick of time, but it doesn’t impress me.