Car loans: Does this escape clause make you want to buy a vehicle?

This article was posted on The Globe and Mail's website July 2nd. By mid-day July 3rd, it had already racked up more than 100 comments.

So I don't think I'm going out on a limb to say that the subject of car loans with an escape clause is a hot topic.

Here's the story: TD Bank is offering auto loans, through its TD Auto Finance arm, that allows borrowers to give back their vehicles if their life circumstances change — they get laid off, transferred to another country, etc. TD is hoping the option of an "out" will woo Canadians who are gun-shy about taking on more debt.

However, on average, our debt levels are already too high, according to Statistics Canada. Figures from the first quarter of this year show we owe $1.52 for every $1 of disposable income (the money we earn, less taxes). That's more than ever before.

Many Globe and Mail commenters picked up on that, accusing the bank of creating a potentially dangerous financial situation. Climaxica noted, "By the time that you've actually realized that you can't afford the car payments anymore, you've probably already ruined your credit rating so this is just TD's way of saying 'Instead of us coming and seizing your car, how about we allow you give it back to us?'"

Taking the opposite view, another commenter called B_. came to TD's defence, writing, "The bank is free to offer whatever deals it thinks will fit the market. No one is obligated to sign up for it. However, if it takes care of an issue, then so be it. I don't see the point of criticizing a product that is innovative. TD is for the most part a wise financial institution and I expect they will make a profit with this product."

What's your view? Is the option of an escape clause a helpful life-planning feature, or will it encourage people who can't really afford to buy cars, to buy cars?