A vehicle is a long-term investment. The Energy Information Administration reports that the average age of in-use, light-duty cars in the U.S. increased to 10.3 years in 2017. We are keeping our cars longer, which means your factory warranty is most likely expired, and your aging car is unprotected from an expensive breakdown.
Extended vehicle protection plans come at an additional cost to vehicle owners in return for coverage on major vehicle system repairs. Are extended vehicle protection plans worth it? When it comes to time, money, and peace of mind, extended protection plans provide important benefits.
Keep reading to learn about extended vehicle protection plans that you can afford, so you won’t break the bank to get protection.
An extended vehicle protection plan, also known as a vehicle service contract, is similar to an insurance policy, except it covers the costs associated with mechanical breakdowns rather than accidents.
Unlike a true warranty, a vehicle service contract is not included in the financing of a new car. It comes at an additional price and is only valid once the factory warranty expires.
There are generally two types of extended protection plans: powertrain and exclusionary. Factory warranties will have terms for both, but you normally choose a specific coverage level with extended protection plans.
What are powertrain and exclusionary vehicle protection plans?
Car dealerships and third-party providers generally offer both types of vehicle protection plans. Sometimes, they also offer “in between” coverage levels that are more comprehensive than powertrain vehiclfe protection plans but still more basic than an exclusionary vehicle protection plan. For example, CARCHEX offers five levels of coverage (Bronze, Silver, Gold, Platinum, and Titanium) that start from basic powertrain coverage and progress to full vehicle coverage.
Even if you purchase an exclusionary protection plan, no extended vehicle protection plan covers every single item in your vehicle. There are several exclusions to be aware of before you make a purchase. Your plan will most likely exclude:
When you shop for an extended vehicle protection plan, you may come across companies that require a vehicle inspection in order to purchase a plan. CARCHEX does not require a vehicle inspection, which makes plans more accessible to drivers who need them.
The average cost of an extended protection plan from the dealership is between $1,000 and $1,500. This may seem like a lot, but consider the price of common repairs.
A year-long study by RepairPal reported that average car repairs peaked at $492 in one month, which is 11% of the average American household’s monthly pre-tax income. In addition, a timing chain replacement on a vehicle like a Toyota RAV4 can cost more than $1,000 with labor.
Here are the costs of common vehicle repairs across different car manufacturers:
If you’re a driver who can’t readily afford these costs, an extended protection plan can provide reassurance and save thousands of dollars in repairs in exchange for small, monthly payments.
Many providers offer payment plans at low monthly installments, so you can budget for surprises with greater peace of mind. You can even pay deductibles as low as $0 for some plans. CARCHEX keeps coverage affordable (as low as a few hundred dollars) by using our buying power to find the most competitive plans for our customers.
There are a multitude of hidden benefits behind extended protection plans. Many of them have nothing to do with alternators or gaskets at all.
What other perks make extended protection plans worth it?
Don’t lose out on all of the benefits of an extended protection plan. Use your contract to its full potential by following these important guidelines:
When you purchase a vehicle service contract, there are several steps you should take to get the most from your plan.
Third-party extended protection plan companies market insurance-backed plans from trusted administrators who can prove that they have the cash-reserves available to make payments. Therefore, you don’t have to worry about losing your money if the obliger can’t pay for the repair.
No matter what vehicle you drive, CARCHEX can help you find an extended protection plan that suits your car and your lifestyle. Are extended vehicle protection plans worth it? With CARCHEX, they certainly are. Call (877) 226-7328 to get a free quote or fill out the online form.
While some people refer to them as “extended warranties” CARCHEX protection plans are technically vehicle service contracts that protect your vehicle from mechanical breakdowns. For more information, see this FTC link or learn more here or by reviewing CARCHEX’s website.
CARCHEX markets and sells vehicle service contracts on behalf of third-party vehicle service contract providers, and your vehicle service contract will be between you and the provider. This website site is intended solely for the purpose of providing general information regarding the purchase of vehicle service contracts. Specific contract terms, rates, taxes, fees and other charges are determined upon validation of vehicle information and acceptance by the vehicle service contract provider, for which CARCHEX is not responsible. Vehicle service contracts may not be sold where prohibited by law.
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