Do You Need a Vehicle Service Protection Plan (That’s an Extended Auto Warranty)?
Car buyers have certainly seen vast improvements in the accessories and technology in vehicles over the last decade. Navigation systems, enhanced braking, automatic power seat controls, back-up cameras, and smart power windows all serve to provide a better driving and ownership experience. But do you need an extended auto warranty to protect all these systems?
The quality of vehicles being built and sold is constantly improving and that is good news for consumers.
But with these improvements we are starting to see repair costs skyrocket when one or more of these items need to be repaired or replaced.
Dealerships and garages no longer employ wrench turners. Today’s vehicle repair specialists are now technicians who need to be familiar with electronics, solid-state components, as well as the mechanical aspects of repairs. This means more training, certification standards, specialized tools and rising costs for vehicle repairs.
There is no denying that pre-owned vehicles are lasting longer, and purchasing one of these vehicles is often a substantial savings over new vehicles, but they are still a major investment. And it is certainly an investment you need to protect. You may find you need an extended auto warranty.
Let’s look at some typical repair costs for a 2011 Chevrolet Malibu *
- Replacing a faulty Power Window Motor $310
- Loss of Air Conditioning due to bad compressor $714
- Engine Vibration due to worn engine mounts $370
- Automatic Transmission Fault (Vacuum Modulator) $4200
As these numbers show there are rarely any repairs that come in under $100 and with tight budgets large auto repairs costs catch us unexpectedly and can cause financial stress. When purchasing a pre-owned vehicle it is wise to consider bundling the loan payment with an extended vehicle service agreement. This helps take the financial surprise element out of unexpected vehicle repairs that are covered under your service agreement. Let me also mention that just like vehicles, extended service agreements can vary widely in the scope of what they cover and the price of the coverage.
Prices for coverage will vary based on the vehicle, model year and mileage but monthly payments are often less that what it costs for a couple of Supreme Pizza’s from Pizza Hut. Now that’s a bargain.
Research shows that many customers get the full value of their coverage premiums after only one or two repairs and that these consumers were glad they paid a bit more each month rather than get hit with a bill for a $1000 or more.
When considering extended auto warranties, also called vehicle service protection plans, it’s important to know how the repair process works. First off and of utmost importance; the vehicle owner must maintain the vehicle and keep it serviced according the original manufacturers guidelines. This will not only keep your vehicle running smoothly and maintain maximum fuel efficiency but ensure any repair claims will be handled promptly and provide quick payment for repairs above the established deductible.
Auto warranties provided through Innovative Funding Services (IFS) also help streamline the repair process. The customer can select local garages for repairs and is provided a list of approved facilities to expedite the repairs. And while some programs and dealerships require the consumer to pay for repairs immediately and file for reimbursement later the service provided on the Innovative Funding Services programs offer payments directly to the repair garage via a corporate credit card which means no major out-of-pocket costs for the vehicle owner.
When financing or re-financing with IFS, please ask about their Vehicle Service Protection Plans. To learn more see our Vehicle Buying and Financing Preparation Checklist.
This post was contributed by Mark Dubis, Automotive Consultant and Writer for the auto industry and former Editor of Digital Dealer magazine.