Service Loaner Guidelines

In the normal course of its business, a dealership may provide loaner or rental cars to its customers. When loaner or rental cars are provided, all customers should be required to sign an appropriate agreement (see following forms).

There are generally two overriding purposes in having the customer sign agreements of this type:
(1) transferring the financial responsibility for potential loss arising out of the Vehicle use to the user, rather than retaining the responsibility in the dealership; and (2) indemnifying the dealership for any loss sustained to the vehicle while in the customer's possession.

The Dealer should consider utilizing the Loan Vehicle Agreement, even if the customer uses a salesperson's demo. Whether the loaner is provided by the dealership or by the sales force, the same type of risk faces the dealership and should be protected against.

Other considerations include:

  • A “loaner or borrowed car” agreement or “rental contract” should be used.
  • These agreements or contracts must transfer financial responsibility of loss (liability and property damage) to the customer.
  • Agreements/contracts should indemnify and hold harmless the dealership of any type losses while vehicle is in care, custody, and control of customer.
  • Authorized drivers should be limited to those persons signing the contract or agreement.
  • Obtain a copy of valid drivers' license with photo ID.
  • Obtain evidence of insurance (insurance card/policy) and verify coverage is current by telephoning insurance agent/company.
  • Limit the operation of the rental or loaner to a specified radius (e.g., 25 miles).
  • Vehicles should not be rented or loaned to customers under 21 years of age.
  • Inspect vehicles at time of rental or loan and upon return of vehicle for damages and mileage.
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