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Auto Warranty And Loan Solutions
Lets face it whenever you decide to purchase a new or preowned vehicle the last thing on your mind are repair costs. Your primary concern is how much is my new or preowned car truck or van going to cost me each month? Its a new vehicle so why would I have repair costs? So as an auto buyer you decide not to get warranty protection on your car truck van or SUV to stay within your monthly budget.
Well consider this fact. The standard warranty on most new and preowned vehicles is 3 years or 36000 miles whichever comes first and the average auto loan term is 66 months.
Those unexpected out of pocket repairs can cause undue stress to your checkbook and budget. By adding warranty protection to your monthly auto payment you can protect yourself from
making monthly payments on a nonfunctioning or improperly functioning vehicle because you cannot afford to make repairs.
Getting less than fair market value for your tradein because your vehicle is nonfunctioning or improperly functioning.
Getting behind on your monthly auto payments because of unexpected repair costs.
Carrying over negative trade equity beingupside down to your next vehicle loan.
If your vehicle is worth less than the loan amount you will have to add this amount to your next vehicle loan. What does this mean to you? Well consider this example.
Tim purchases a new Cavalier in January of 2002 and decides against purchasing the warranty protection. In June 2005 Tims engine failed and the repair estimate came to 3350.00 because he had over 41000 miles on the Cavalier and he was over the 3 year 36000 mile standard warranty. Tim didnt have the money so; he decided to trade it in asis at the dealership where he originally purchased it for a brand new Chevy Cobalt.
Kelly Blue Book shows that Tims Cavalier is worth 5425.00 in Good condition. However because of the blown engine Tims tradein is worth only 2075.00 because of the necessary engine repairs. Tims payoff amount for his existing loan on the Cavalier is 5625.00.
The difference between what Tims Cavalier is worth and how much he owes on his existing loan is 3550.00. Tim will now have to add this amount to the loan for his new Cobalt. This is what is referred to as being upside down or having negative trade equity. Having warranty protection on the original loan could have saved Tim over 3000 and prevented him from paying additional repair costs and adding additional cost to his new Chevy Cobalt loan. Tim could be paying for this mistake for years to come because more time is needed to pay the negative equity that was added to his new Cobalt loan.
Warranty protection plans can be added to your monthly note for less than 30.00 a month.
About the writer: finance officer of car dealership
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Posted in Automotive
