By Jil McIntosh
It’s a fact of life: the moment you drive your new vehicle off the lot, it drops in value. If you’ve financed the full amount, that depreciation creates something called negative equity: you now owe more than the car is worth.
Ordinarily, that’s just the way the system works, and most people pay down the loan or lease until it’s finished. But should a major circumstance such a job loss or disability disrupt that, you’d have to make up the difference. One solution is Walkaway, which offers a variety of programs to make up the shortfall or to cover payments until you get back on your feet.
Based in Toronto, Walkaway is currently available in Atlantic Canada, Ontario and Manitoba, with national coverage rolling out later this year. The ten-year-old company also does business in the United States and Australia.
“The idea behind it is that it’s a vehicle return and payment relief program,” said company president Robert Varga. “Previous to Walkaway, if I leased or financed a car and some life event befell me where it wasn’t practical to keep the car, such as losing a job, I’d return to the dealership and say, ‘I need to get out of this car.’ They’d call the lender. Say you owe $25,000 to get out of the car, but it’s worth $20,000, so you’d be out of pocket for $5,000. (With Walkaway) we pay the shortfall, we preserve your credit rating and your savings, and we preserve the relationship between the consumer and the dealer.”
Walkaway offers several products, but the one most customers know is a complimentary program that’s offered by specific dealers on all vehicles financed through the dealership as a customer incentive , available to all customers regardless of age, health, and type or cost of vehicle. For the first 12 months, the program covers up to $7,500 of negative equity in the case of one of six unforeseen events: job loss, disability, loss of driver’s license due to age, illness or injury (but not through traffic offenses or impaired driving), international employment transfer, self-employed personal bankruptcy, and accidental death.
Under this program, you’ll have to relinquish the vehicle, but providing the difference is less than the $7,500 coverage, you’ll be able to do as the name suggests: just walk away. Since there’s no stain on your credit rating, you should be able to easily get back into car ownership if your personal circumstances change.