With U.S automakers in serious trouble and struggling to survive the recession, new terms associated with car purchases could bring consumers back to car lots with more confidence that they can comfortably buy. After several months of dismal sales numbers, car dealerships celebrated an announcement that both Ford and General Motors will cover car payments for buyers who suffer job losses.

The consumer is in a fragile state and it will be impossible for the economy to recover without the rebuilding of consumer confidence. Purchases of big-ticket items like cars are down substantially because no one is interested in locking themselves into years of payments when they are unsure of what the future holds for them financially. With millions of jobs lost already in this recession, people are feeling less secure than ever.

The terms of the Ford’s program include the automaker making monthly payments of up to $700 for individuals that buy cars or trucks between now and June 1 and later lose their job. Ford will also provide zero percent financing on many vehicles, giving customers the opportunity to finance car purchases without paying interest for a period of time. The program is insured by a third party, for those who worry about Ford’s ability to keep its promises while it struggles to stay afloat.

General Motors, which is in an even more precarious financial position than Ford, will cover up to $500 in monthly payments for up to 9 months for any customer that purchases a car during the month of April. GM was given two months by the Obama administration to restructure in a satisfactory manner before bankruptcy becomes a likely scenario.

This announcement comes a few months after Hyundai agreed to buy back cars if buyers lose their job within a year of purchase. The company has stated that not many customers have taken advantage of the offer, but that it has helped sales and been a positive marketing tool.

It remains to be seen whether the US auto industry can be salvaged at this point, but these new terms could provide a boost to dealerships desperate to start moving inventory again.

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Tags: automakers, car buyers, financing, job losses, recession

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