Not being able to take your vehicle to the mechanic for fear of costs can be as frightening as a loved one refusing needed medical care due to a lack of health insurance. As the rules of autos are being rewritten, chances are your family is coming closer than ever before to relying on a solid vehicle service plan or what is otherwise known as an extended auto warranty.
Extend service agreements are designed to pick up where an original factory warranty drops off. No two plans are alike. At the time of vehicle purchase you can purchase the contract the dealer offers, go with third-party coverage, or even transfer a plan from the car's previous owner. By paying a monthly premium, your agreement's deductible covers big repair costs sure to come.
Two valid reasons those repair costs are coming? Consumers are buying older or used cars, for one; and two, hanging onto current cars longer. If not convinced, we've dug deeper and crafted eight reasons to reexamine this expense when working with tight budgets.
Consumers are buying used and holding onto cars longer
While new cars sales continue to plummet, a total of 40 million used cars, or an increase of 9.5% from last year's sales, are predicted for 2009. Certified pre-owned dealerships expanding their business to include the sale of used cars are up 55%. Consumers are looking for reassurance that a new "older" car will not become a financial burden.
Increasing cost of auto repairs
With recession comes inflation. Vehicles today include more costly technology repairs in the form of backup screens and navigation systems, as well as more complicated or modern power or drivetrain components. You want to read through your contract closely and make sure you understand what's covered when it comes to such language as Wear-and-Tear or Bumper-to-Bumper.
Emergency fund is on empty
Our national savings rate average increased (the only way it could go was up), but layoffs and foreclosures don't stimulate a family's ability to stash more cash. Chances are you're still banking on a credit card for an emergency plan, which places you in bad debt considering percentage rates are running amuck during this final hour of unregulated freedom.