Auto warranties (also known as extended service contracts) are fairly inexpensive to purchase. You just have to make sure that you are getting the right kind of coverage from a reputable provider, and that you receive a competitive rate quote.
Would you know how to use your extended warranty coverage if you decided to get a vehicle service contract? Most people don’t know how it works, but they are pleased to learn that the process is often relatively easy and straightforward. That is, if you have the right coverage and provider.
Purchasing an automobile is often a complicated process that requires many decisions. Individuals have to decide on the car itself, how it will be paid for, and if any warranties will be bought. While expert car buyers may know exactly what to do, others could be left wondering what to buy and which offers to pass on.
When you are purchasing a used car, it may – or may not – have time left on the original manufacturer warranties. If the vehicle has exceeded the terms of the original warranty, you may want to purchase an extended warranty, also known as an extended service contract.
Since leases are typically for brand new vehicles, this means that the same rate of depreciation applies as if it were financed. Brand new vehicles lose at least 10% of the purchase price as soon as they are driven off the lot. And a new car will lose at least 20% of its value in the first year. Gap insurance covers the difference between the purchase price and the actual value of the vehicle.
When you are ready to sign the papers that will close the deal on your next car, make sure that you understand exactly what you’re paying for. Don’t focus on the monthly payments, but consider the whole cost of the vehicle. This way, the dealer won’t be able to sneak in any unnecessary expenses.
Credit-challenged car buyers, especially those on a tight budget, should seriously consider automobile gap insurance when their annual mileage is above average, the finance term is over 60 months and the total down payment is less than 20 percent.