Lose your job, get a refund

By SmartMoney

If anxiety about layoffs is keeping you from booking a vacation to the Bahamas or buying a family sedan, wouldn't knowing you could get a refund if you lost your job make you more willing to take the leap?

That's what companies such as General Motors, Ford Motor, JetBlue and Hyundai are betting on. They're trying to woo customers by offering special breaks and refunds on big-ticket items based on whether a customer loses his job:

• South Korean carmaker Hyundai helped spark the trend in January when it launched its Assurance program, which lets customers return any new vehicles if they lose their jobs and absolves them of any remaining car payments (up to $7,500).

• Airline JetBlue soon followed by offering full-fare refunds to customers who get laid off before their trips.

• And men's clothier Jos. A. Bank now offers rebates to customers who get laid off after buying suits -- and they keep the suits. (See the table below for even more offers.)

Appealing to consumers' insecurities in the face of potential layoffs can be a productive way to drive sales at some struggling companies, says Z. John Zhang, a marketing professor at the University of Pennsylvania's Wharton School. "It can certainly resonate with targeted customers," he says.

There are already some signs that this selling tactic works. Hyundai's sales were up 14% for the first two months of the year compared with last year, says Jim Trainor, a company spokesman. The boost can't be attributed to the Assurance program alone, but "it's been a huge help," he says.

Likewise, Western National Property Management, a real-estate company in Irvine, Calif., that launched its own layoff protection program a couple of weeks ago, has seen a "significant increase in our apartment lease renewals," company President Thomas Shelton says.

• How GM and Ford protection plans stack up

Though the sense of safety these programs offer is certainly enticing, make sure to consider a few factors before pulling out your wallet.

Size up the situation

Are you willing to buy a car or live in an apartment that you aren't particularly jazzed about just for the peace of mind that layoff protection provides?

• Check auto loan rates

To help answer this question, ask yourself how likely it is that you will lose your job. If the odds are low, then it may not be worth it to buy your third-choice car from Hyundai instead of your first-choice car from, say, Toyota. If the odds are pretty high that a pink slip is in your future, though, the $7,500 in auto loan or lease forgiveness Hyundai offers sure is a lot of money not to have to pay when you're not getting paid. And you can dodge possible dings to your credit scores.

Explore cheaper options first

New promotions like these can be distracting, so be sure to use the same shopping savvy you normally would. Compare prices to see whether there's an option available that's less expensive but comparable. (See MSN Autos for research.) The Hyundai and JetBlue programs are attractive because they don't cost anything extra.

"But if you're really concerned about money or are truly overextended on your budget, a better financial decision is to buy an older car," says Joe Ridout, a spokesman for Consumer Action, a consumer advocacy group.

For example, a new Hyundai Elantra sedan has a manufacturer's suggested retail price of $14,815. But a used 2007 model goes for less than $10,000, according to auto research firm Kelley Blue Book.

The same goes with booking a flight. When it comes to JetBlue's offer, shop around to make sure you can't get a flight for less. We found a round-trip ticket from New York to Fort Lauderdale, Fla., on JetBlue for $360 and one for $318 (flying US Airways) using travel search engine Kayak.

Continued: Read the fine print

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