Christie's Car Keys

What are the “Extras” Car Dealers Offer and Should You Buy Them? 

There are a number of items that a dealership might offer during the financing stage of your purchase. You know….all those insurance policies, warranties, etc. Here’s a quick review of some of the more popular ones for you to consider.

Gap Insurance – Gap insurance pays the difference if you experience a “total loss” and you owe more on your vehicle than its current market value. This insurance is highly recommended at the time of purchase if you are “upside down” in the vehicle you are trading in (meaning that you owe more for the vehicle than its current market value), or if you are not putting any money down to purchase your new vehicle.  In either case, the odds are greater that if something happened to your vehicle you might owe more for the loan payoff than your insurance company will pay.  And it usually only adds around $10 more per month to your car payment.  

Service Contracts – You can purchase a service contract for your vehicle that will cover it after the manufacturer’s warranty has expired.  This extended coverage is offered at different levels of mileage/years of warranty. A top level extended warranty will cover everything that the factory warranty does, excluding wear and tear. You can also have the vehicle serviced at any dealership. For someone who drives a lot of miles or keeps their car for extended periods, this coverage might be a good idea. The price varies based on the terms (years of warranty and miles) and whether the vehicle is new or preowned (these warranties can be purchased for used cars as well). It is more desirable to buy an extended warranty when the car is new because in the long run you will get a better deal by paying only for the extra coverage. If you wait to purchase it later you’re buying a warranty on a car that is older, with more miles, making it more expensive. 

Maintenance Contract – Some manufacturer’s offer prepaid routine maintenance such as oil changes, tire rotations, refilling fluids, etc.  The main benefit is that by paying up front you avoid cost increases later. Coverage is based on the miles and years, similar to a warranty. Also, you pay for this contract in your monthly payment so that maintenance costs are pro-rated rather than a lump sum all at once.

This is just a sample of what’s available to cover your car that may be worth considering depending on the vehicle you are purchasing and your trade-in payoff, if any. The dealership Finance Manager will review them with you and provide details of each program. 

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