Loaner vehicles: Best practices for dealerships.

Best practices for your service and loaner agreements.

Legal review

This is a very important step. A legal review can help to protect your interests, provide clarity, mitigate some risks and confirm that legal requirements are met. It is strongly recommended that any loaner agreement be reviewed by your legal counsel.

Insurance responsibilities

Loaner claims can get complicated. Your agreement should make insurance requirements clear. Things you might want to consider are customer insurance requirements and customer responsibilities.

A good practice is to collect and document the customer’s proof of insurance.

Inspection, condition and returns

Before the customer leaves the dealership, record the mileage, take photos and document any existing damage.

Set clear return rules that include:

• The exact return date and time
• What happens if the vehicle is returned damaged
• Return hours, processes for after-hours drop offs and disputes

Tolls, parking and moving violations

To help avoid surprise costs, consider stating whether the customer is responsible for any tolls, parking tickets and moving violations.

Age requirements

Consider a minimum driving age, commonly 21. Drivers under 21 have higher collision rates and age limits can reduce incidents.¹

Fuel rules

Fuel costs add up. Your agreement should say who is responsible for refueling the vehicle upon return. For example, customers can be required to return full or pay a refill charge.

Authorized drivers only

List all eligible drivers on the agreement and have them sign. State clearly that only drivers listed on the agreement are allowed to drive the loaner. This might help prevent insurance gaps caused by unauthorized drivers.

Prohibited uses

You may want to ban high risk uses, which may include:

• Gig work/delivery/rideshare use
• Towing or transporting other vehicles
• Driving under the influence of alcohol or drugs
• Driving on unpaved surfaces (if you choose)
• Subleasing or lending the vehicle to another person

Radius of operations / mileage limits

Without clear limits, a customer may drive out of state or farther with “unlimited mileage.” Adding mileage, defined driving area or radius restrictions can help lower risk and wear on your fleet.

Smoking and pets

Smoking and pets can damage interiors and create disputes. If you decide not to allow it, make clear that smoking and pets are prohibited in the vehicle.

Incident reporting procedures

Incidents can happen at any time. Provide every customer with simple reporting instructions when they take the loaner. Keep incident instructions and an accident/emergency kit in every loaner vehicle. Kits can include things like a blanket, flashlight, batteries, small shovel and phone charger.

Electric vehicles

If EVs are part of your fleet, include basic battery/range expectations, where and how to charge and towing charges if the battery is fully depleted.

Asset tags / telematics disclosure

If loaners have asset tags or telematics, tell customers. Explain what may be collected, such as location, odometer reading, oil life, battery state and diagnostic trouble codes.

For more information regarding best practices, please contact: ADILossControl@ally.com

¹ “Young Drivers” NHTSA