The American Recreation Coalition (ARC) has found a way to bring to the RV sector a program pioneered by the U.S. auto industry to temper the fear of a job loss by potential buyers. This program makes monthly payments on a vehicle for several months if the buyer loses his or her job.
These programs have now become widespread throughout the auto market, including all vehicles manufactured by General Motors Corp.
Derrick Crandall, ARC president, on behalf of the RV and boating industries, announced Friday (May 15) that the the program administrator of GM’s Payment Protection program, cynoSure Financial Inc., has offered to provide RV manufacturers with a similar program covering all U.S. purchasers.
The following is a brief synopsis of how this program might work.
The program offered by cynoSure is a short-term (12 or 24 month) protection instrument which provides up to a specified number of monthly payments of an agreed upon amount. There is also a 90-day exclusionary period and a 30-day waiting period built into these programs. The policies normally make three or six payments ranging from $500 to $1,500 a month. The program is designed to act as a bridge, as the buyer finds a new job, or to give the buyer time to sell his RV.
There are important exclusions, including pre-knowledge of a layoff or loss of employment. The exclusionary period begins the same day as the coverage period, which is the purchase date of the RV. The exclusionary period is used to eliminate those people who have prior knowledge of a potential job loss. If he/she loses his/her job during this period, there are no benefits eligible to be paid. Once the 90-day exclusionary period is up, the purchaser has up to 21 months of coverage remaining. If he/she loses his/her job any time during those 21 months, he/she is eligible (after waiting 30 days) to receive up to three or six loan payments for up to the maximum payment amount.
The cynoSure proposal can be modified by the RV industry as a whole, or for manufacturers of sufficient volume, on a company-by-company basis. For example, a manufacturer offering high-end RVs could increase the monthly reimbursement of payments to eligible buyers by paying a higher cost per vehicle.
If enough companies are willing to provide the information on the RV market, the pricing for various programs can be reduced below the following “ballpark” figures:
- 12 month coverage period, 90-day exclusionary period, 30-day waiting period, three payments up to $500 $115/vehicle.
- 12 month coverage period, 90-day exclusionary period, 30-day waiting period, six payments up to $500 $215/vehicle.
- 24 month coverage period, 90-day exclusionary period, 30-day waiting period, three payments up to $500 $180/vehicle.
- 24 month coverage period, 90-day exclusionary period, 30-day waiting period, six payments up to $500 $275/vehicle.
Keep in mind that there could potentially be many, many variations to this concept. The product could be offered to those purchasing:
- At specific shows or during a specific period – say June and July.
- Only new non-currents, adding value without further discounting prices.
- Wrapped into certain financing packages, including a national credit program.
- Qualifying used RVs that are financed.
cynoSure is planning a webinar at 1 p.m. on Friday to further explain the mechanics of the program and to answer questions on the proposal. To participate in the webinar, contact Derrick Crandall, either by e-mail at [email protected] or call (202) 682-9530 no later than close of business on Tuesday.