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An Air Bag Recall and A Free Rental Car

It’s been an odd week. On Monday we took our oldest car, a 2008 Nissan Versa in for a minor recall and an oil change. We got the car back only to receive a call from Nissan North America about yet another recall on the same car for a Takata front air bag. What happened next was so surprising I had to write about it.

Takata Airbag Background

For those who do not know, Takata is a large airbag manufacturer. They produced many of the air bags in over 19 different automakers vehicles from 2002- 2015. Anyway long story short there was something defective in their manufacturing. The inflator for the airbag would corrode over time. If the inflator ruptured metal shards from the air bag would be spread throughout the cabin. 11 people have died from this issue and over 180 injured. It has prompted the largest safety recall in us history involving more than 40 Million vehicles.

My Versa is Recalled

So what does this have to do with my little Versa? Well they added it to the list earlier this year.  It now requires the driver side airbag to be replaced. The only thing is, there is a 4 to 6 month backlog on the replacement parts. This is where things get interesting and we start to tie into personal finance a bit.

Class Action and a Free Rental Car

Under the terms of a recent Class action settlement Nissan has agreed to provide owners up to $500 dollars, a free rental car while awaiting repairs, and reimbursement for reasonable expenses. Not to mention free repair of the defective airbag. That’s right, here I sit with a brand new 2017 Nissan Sentra that I will be driving for free for the next 4-6 months while I await repairs of my Versa.

Public Safety Announcement: Check if Your Car has a Recall

Now, before I interpret what this means financially let me point out that you should semi regularly check your cars vin for any recalls, especially if made between 2002-2015. The US Government provides the following site for just such searches: Safe Car. Consider the initial part of this post almost a public service announcement that you should determine if your vehicle is effected for your own safety.

Nissan is Not the Only Air Bag Recall

That out of the way be aware similar settlements to Nissan’s are happening with many manufacturers, and similar delays also exist. The ramification can be very advantageous (or not so much) to the customer depending on the scenario. I wanted to explore the ramifications of this particular loaner a bit more in both the hopes that more people will get their cars repaired and perhaps some people may profit.

A Financially Advantageous Recall?

So first we have to admit our Versa is not worth very much. To a private seller in good condition it might bring $4,000. So in our case a rental of a new Nissan Sentra with 20 miles for 4 months could easily exceed the cost of our Versa. The dealer is picking up all costs except insurance. So they cover tires, oil, etc. Add to that the potential for a 500 dollar check at the end and our car is almost assuredly worth less than the mitigation steps Nissan is taking. In theory an arbitrage scenario may exist for someone to buy a poor condition Versa for 2K.  They could drive around a new car for 4-6 months and receive a 500 dollar check.  Then be able to sell the car at the end for what they paid. Your mileage may very depending on the wait time for the repair parts but it does offer an interesting opportunity for those inclined.

Recall Good Deal or Bad Deal?

But this all got me thinking, what about cases where this was not a good deal? What about those with nicer cars? I did some searching and in some cases people with cars significantly more expensive them mine were getting rentals of the same or even lesser caliber then mine. If you had a 2015 high end infinity and got a Sentra rental car your probably not making out ahead even with the $500. Why?

Cost of A Car Sitting

Well here is the thing, there is a cost to your car sitting in the driveway for 6 months.

    • The first cost is you are still paying insurance on your parked recalled car. Your rental car will be covered by your existing car coverage.  Meanwhile you’ll be paying insurance at the rate of your existing car, not the rental car. I.E. you may be paying more than you need to be. Not a concern for my Versa, but if you were paying insurance on a sports car and they put you in a Versa you might be ticked. If you do get in this scenario I would recommend you call your insurance company and see if something can be worked out.
    • Cars don’t do well with sitting still. The longer a car sits the more likely something will go wrong. At one time we had an old Ford Escort in the driveway someone gifted too us. It became an issue because our brake lines rotted out when we didn’t drive it often enough. Batteries go dead. Tires flat spot. You might end up with a repair bill at the end if you are not careful. This is especially true as by accepting the rental car you must sign a waiver saying you will not drive your car except to and from the dealer until the repair is complete. In our case I can mitigate this one somewhat as we have a large driveway where we can move the car around at least enough to circulate the fluids.  I plan to do so about 2x a month. Also I will disconnect the battery when not in use. If you take this deal I would recommend you do the same.
    • Speaking of storage, many car dealers don’t have space to store these cars. You may need to store the underivable car for months.  In our case I have to store the car at my home until the parts are available. This means instead of our driveway supporting our normal 3 cars, I’m not parking 4 cars there. In my case due to space this just means a rare bout of shuffling, but if you lived somewhere with limited parking this could rule out this action entirely. Unfortunately I can not provide much advice here.
    • Your existing car is still depreciating. I don’t have to worry about this much with the Versa since it’s not worth much to begin with. But if you had a newish car it will continue to have its value depreciate while it sits. It might be worth a 1/3 less in 6 months. Unfortunately part of the deal is you cannot sell the car until this is all over. Depending on your vehicle the depreciation which may cost you more than buying a new car.  Again, I do not think there is a way around this one.
    • Speaking of sell that might also be an issue for those with car loans if they have trouble paying the bill. Then again this may be a problem even without taking the rental car, since selling a car with a death inducing airbag might be a tough sell. Hopefully none of my readers have placed themselves in this scenario. Still it’s a good reminder not to get underwater on a car as you never know what could happen.

Death Obviously Still Wins

Still, all these things seem to beat the alternative, Drive a vehicle that could kill you. If you have one of these cars regardless of circumstance I would recommend you do not drive it.

A Recall Opportunity?

If you don’t have one of these vehicles and are in need of new wheels this may present an opportunity. Find one of the cheapest cars on the recall list and investigate if it has recall supply issues and what type of settlement the automaker has cut. If there is a significant wait and a good payout deal you might want to consider buying a lesser quality one and taking advantage of the potential arbitrage. Obviously your mileage will very, but you might accomplish two things:

  1. Getting a death trap off the road potentially savings a life
  2. There is a possibility you could sell the car after repair for about what you paid.  This could provide you with a free few month rental car to drive around in.  It also may provide some extra cash once the settlement completes.

Anyway something to consider. Either way, it was such an interesting an unexpected scenario I just had to write about it.

Have you ever experienced a car safety recall? Did you ever end up driving around in a dealer rental car for free for an extended time period?


  1. Dividend Diplomats
    Dividend Diplomats October 18, 2017

    Safety recall arbitrage haha That is definitely a new one that I have not heard before. I personally don’t know if I would go through the hassle, unless it was a major repair like a new engine. Seems like an awful lot without substantial upside.

    That being said, a recall can ad value to a car that is old and depreciating. It could also help you replace an expensive part that was at the end of its shelf-life. So there are some positives to the recall.


    • FullTimeFinance
      FullTimeFinance October 19, 2017

      Perhaps. Honestly it’s something I never contemplated until the rental car landed in my lap. My wife still looks at me daily and asks if a 6 month free rental car is for real.

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