Hyundai expands guaranteed resale plan to cover i30, Sonata, Santa Fe and Tucson

Hyundai wants people to change over their cars the way they switch mobile phones.

The company has launched a finance package that removes the "balloon payment" or buyout figure from the equation, making it simpler when a lease ends to switch an old car for a new one.

The scheme, called Hyundai Shield, shifts the resale risk away from the customer by guaranteeing the worth of the car at the end of the lease.

In the past customers have been burnt when the balloon figure was larger than the resale value, complicating the turnover to a new car.

But Hyundai Financing has teamed with the St George Bank to ensure that the resale value of the car at the end of the lease period is no longer the buyer's concern.

The minimum value of the car is guaranteed at the end of the loan

Chief operating officer John Elsworth says the new deal will allow buyers to manage the purchase and ownership "much like they do with their mobile phones".

It differs from other finance options in that "we can offer a no-deposit requirement, monthly repayments are lower because you are not financing the whole value of the car … and the minimum value of the car is guaranteed at the end of the loan," he says.

At the conclusion of the lease, the customer has three choices: trade the vehicle for a new one, return the vehicle and walk away or buy it.

A further option includes regular servicing in the monthly lease payment.

"The customer is in charge throughout that entire process," Elsworth says.

He says the loan package means customers can change cars over more often and with less hassle.

"Hyundai Shield shortens the buying cycle, with customers able to upgrade quicker, for instance as their life stages change — if they have more kids or if the kids leave home," he says.

The move is designed to give Hyundai dealers a larger slice of the lucrative car finance market.

Roughly 85 per cent of new car buyers use finance to fund their purchase but only 35 per cent do so through the dealership.

As margins on new car sales shrink, dealers make more money through financing, servicing and parts than they do on the initial purchase.

By locking buyers into finance and servicing, they increase the chances of keeping customers for life.

Hyundai Shield launches in August and initially will cover five models — i30, Sonata, Santa Fe, Genesis and Tucson. Others follow next year.