4 Things to Consider When Buying a Vehicle that Could Save You Money in the Long Run

May 4, 2018

Protect your investment

A house and a car are two of the biggest investments you’ll make in your lifetime. Now that you’ve bought a car, you’ll want to protect your investment.

So how do you protect your investment?

Gap insurance, extended warranties, tire and wheel protection, and fabric/paint protection are great ways you can protect against mishaps in the future.

Gap insurance
Extended warranty
Tire and wheel protection
Fabric/paint protection

Which may be right for you?

Here are some pros and cons to help you make informed decisions.

Gap insurance

Gap insurance will protect your investment in case you have an accident while owing money on a depreciated vehicle.

Mind the gap: What is gap insurance?

When you drive your car or truck off the lot, your vehicle’s value immediately depreciates by as much as 11 percent. A year later, most cars have lost about 20 percent of their value.

If your car is damaged in an accident and you make a claim, a standard auto insurance policy will pay the market value of the vehicle at that point in time, taking depreciation into account.

At the early part of a loan, you are paying mostly interest. That means that if you put down a small down payment you could find yourself in a situation where the loan amount is greater than the vehicle’s market value.

Gap insurance covers the difference (a.k.a. the gap!) between a vehicle’s current value (paid by standard insurance) and the amount you owe on it.

When to go for the gap

Consider gap insurance especially with:

Leasing (usually required anyway)
Vehicles with faster depreciation
20 percent or less down payments
60 month (or longer) financing
Car loans with negative equity rolled over from an old loan

Extended warranty

Another way to protect your investment is with extended warranties.

Consumers are keeping their cars longer, at the same time that new technology and electronics are becoming even more integral to cars. Holding onto a vehicle with complex parts to service has made many drivers interested in extended warranties, also called extended service contracts.

Some extended contracts last for 3 years or 36,000 miles, while others end after 10 years or 100,000 miles are clocked on the odometer.

What are the pros and cons of extended warranties?

Pro: Extended warranties cover expensive repairs

Computerized technology is costly to get fixed.

Pro: Extended warranties are tailored to drivers’ needs

You don’t have to pay for what you don’t need.

Pro: Dealers take care of all the paperwork

Check that off your to-do list!

Con: Extended warranties require repairs only be made at their approved providers

You might be on a trip where an approved provider isn’t close by.

Con: Extended warranties don’t cover everything

Make sure you are familiar with the exclusion list so there aren’t surprises “down the road.”

Con: Extended warranties are pricy

If only you had a crystal ball! You’re buying something expensive that you might never use, but if you need it would be even more expensive without it.

Con: You might not end up needing it

That said, not getting into an accident is certainly a pro! And you did get the peace of mind knowing a costly bill would have been covered.

Tire and wheel protection

You can also protect your investment with tire and wheel protection.

Pro: The protection will have your tires and wheels covered if you get into an accident due to a road hazard.

Con: Non-road-hazard accidents, such as crashing into a curb, are typically not covered.

This coverage is recommended if the tire and wheel protection costs less than 25 percent of the value of one of your wheels.

Fabric/paint protection

Protect your investment inside and out!

Fabric protection

Pro: You never know when something might spill and damage your upholstery. Fabric protection guards against stains; and, if they do appear, this protection has you covered.

Con: Spraying Scotchgard on your upholstery is an inexpensive protective alternative.

Paint protection

Paint Protection Film (PPF), also called clear bra paint, is a thermoplastic urethane film that protects a vehicle’s exterior, including hood, side mirrors, fenders, side skirts, door edges, and bumpers. It also gives your vehicle a smooth finish!

Pro: Offers benefits without repainting your vehicle.

You can save time and money.

Pro: Preserves paint

PPF contains a UV coating that maintains your vehicle’s original color.

Pro: Easy to clean

No more trips to the car wash. PPF means you can simply dust off your car for it to sparkle.

Pro: Avoid rock chips

PPF protects your vehicle from rock chips, small stones, debris, climatic change, and abrasion.

Pro: Goodbye, door dents!

PPF protects door edges and bumpers in the parking lot. No more notes under your windshield!

Pro: Ups resale value

Adding a PPF finish will likely increase your vehicle’s resale value.

Pro: It lasts

PPF provides 3 to 5 years of protection.

Pro: Cost effective

PPF saves money in the long run.

Con: expensive

Protecting your vehicle isn’t always cheap.

Protecting your vehicle … and wallet

Gap insurance, extended warranties, tire and wheel protection, and fabric/paint protection are all ways to prevent damage to your vehicle and your bank account. Consider the pros and cons and what’s right for you!