Car loan add-ons Are worth it? Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our mission is to help you make smarter financial decisions by offering interactive tools and financial calculators, publishing original and objective content. We also allow you to conduct your own research and compare information for free to help you make informed financial decisions. Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Money The deals that are advertised on this site come from companies that pay us. This compensation can affect the way and where products appear on this website, for example, for example, the order in which they may appear in the listing categories and other categories, unless prohibited by law. Our mortgage or home equity products, as well as other home loan products. But this compensation does affect the information we publish, or the reviews that appear on this website. We do not contain the entire universe of businesses or financial offerings that could be accessible to you. SHARE Maskot/Getty Images
5 min read published 27th September 2022
Written by Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers with the ways and pitfalls of taking out loans to purchase a car. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since late 2021. They are passionate about helping readers gain confidence to control their finances with detailed, well-studied information that breaks down complex topics into manageable bites. The Bankrate promise
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We receive compensation for the placement of sponsored products and, services, or by you clicking on certain links posted on our website. So, this compensation can affect the way, location and in what order products are listed in the event that they are not permitted by law. We also offer mortgage, home equity and other products for home loans. Other elements, such as our own rules for our website and whether a product is offered in your area or at your own personal credit score can also impact how and when products are featured on this site. While we strive to provide the most diverse selection of products, Bankrate does not include details about each credit or financial product or service. Dealer add-ons are often used to convince buyers to spend more than intended. You'll be charged interest on any add-ons included in your loan. Be aware that although you might be offered several options but you are able to decline each one. Also, you can choose to use these car services separately if you prefer only one. Then, you are able to stop any service at any time if decide you don't want them. 1. Gap insurance Gap insurance is a way to cover what you owe and what the value of your vehicle is. If your vehicle is damaged or stolen, gap insurance could aid in breaking even on the cost. It's a good investment when you're -- in the event that it's not included within the leasing agreement. The gap insurance may be worth it when you're getting a car loan to pay more than your car is worth, which is the case when the balance of your car loan is rolled into the payment on your new car. Still, it's best to study the costs of gap insurance through other sources before you are aware of whether the dealer will offer you the best price. Is gap insurance worth it? The purchase of gap insurance is worth the cost if it is done at a rapid rate. The insurance will safeguard you from having to pay the amount that is the difference between the value of your vehicle and what you owe if the car is declared to be to be a total loss. But you should look into gap insurance prior to deciding whether to purchase it. Banks, credit unions and third party sellers offer gap insurance. You don't have to purchase gap insurance through a dealer, and if you find a better deal elsewhere you'll be able to get the insurance without the dealer markup. 2. VIN etching VIN etching is the process of engraving the vehicle's identification number onto the car's windshield and windows. It makes your vehicle easily identified and therefore lowers the value of your vehicle to burglars and possibly easier to locate should it be stolen. While they may offer discounts for drivers who have this add-on but you can do it yourself and save a few dollars. What is the best option? VIN etching worth the cost? The add-on isn't worth it. It can be done at an after-market detail shop or DIY it by using an online toolkit for less than $20. 3. Extended warranties begin to take effect after the manufacturer's warranty expired, and typically will cover less. They tend to be more expensive than most repairs, especially when combined with your auto loan. are usually lumped in with extended warranties and require buying scheduled maintenance check. The cost of a maintenance plan is typically rolled into your monthly car payments. Are extended warranties worth the cost? Extended warranties can only be beneficial when you anticipate owning the car for longer than the manufacturer's warranty but even then it's not always the right choice. Check Kelley Blue Book and Edmunds for expected repair costs and compare them to the extended warranty offered by the dealer. If you could reasonably save money for repairs when you own the car, an extended warranty could be a waste of money. A service plan is only helpful if you intend to use a dealer for maintenance and are fine with maintenance potentially occurring on a less frequent basis than what the manufacturer suggests. If you choose to buy one of these options, take the time to research these from other sources. You can and should look around for the best price. Also, you don't have to accept a dealer's extended warranty when buying a car. 4. Tire and wheel protection The cost of tires can be quite high. Dealers offer tire and wheel protection to cover the cost of replacement of the rims and tires when potholes, nails, or curbs harm them. However, the majority of tires have their own guarantee. If there are any issues, you will likely still be covered with no tire or wheel protection. Are tire and wheel protection worth the expense? The value of this add-on is contingent on the driving conditions you have experienced. If you reside in an area with notoriously rough roads, looking into the extra protection could be advantageous. You can most likely find alternatives that are less expensive for the same amount of coverage at a different location than the dealer. 5. Fabric and paint protection This add-on does exactly as it sounds it is a coating dealers can apply to your vehicle's interior and exterior to shield it from harm. Some manufacturers incorporate this feature in new models of cars So make sure you double dip on this extra feature. Are paint and fabric protection worth the cost? Fabric protection and paint are usually not worth the cost. While keeping your brand new car in top condition is essential, you can get the same results from the local hardware store. Consider saving money and doing it yourself. 6. Key protection Depending on your car's key and fob types, replacing one or both of them can be pricey. But the additional cost of protection for keys offered by a company could be higher than replacing the key yourself. If you choose to use key protection, you can look at the dealer's add-on options offered by your insurance. Also, you can consider investing in the latest technology, such as Tile, to help you find your key if misplaced. Is key protection worth it? This add-on is not worth the extra cost. You are able to easily replace your key if you lose it. Don't be influenced by dealers that are focused on the latest technology keys today have to offer. 7. Insurance for credit This option is designed to assist you in attempting to pay off your auto loan if you cannot. It is only activated in certain situations -- like death, disability or unemployment. Unlike , there is no payout for you, only for the lender. It is not required to purchase credit insurance in order to finance or buy a car and so, don't let salespersons pressure on you. Is credit insurance worth the cost? Credit insurance is a good option in times of need, however it can be more costly than establishing the rainy day fund. In addition, you may be able find credits insurance from a third party at a cheaper rate. In certain cases the insurance you currently have may be enough to cover your expenses with no additional cost. Be aware that no Dealers often offer add-ons as part of a package, rather than stand-alone items. This method -- which is designed to sell more items -is usually presented as an "protection bundle." It's typically sold in the form of levels such as bronze, silver and gold. Also known by the term "menu selling," this approach makes it easier for the dealership to ensure the salesperson presents all of the . This can create a feeling for the customer that these services aren't optional even though they are. Be aware that any additional feature you decide to add to your loan is likely to cost you interest. Keeping the added cost in mind can help you remain in the right direction in the event of a dispute . How do you cancel dealer add-ons Since each additional service described above is optional, you should be able to cancel them under all circumstances. Review the contract you signed. Review the time limits as well as cancellation policies. It is possible to mail or fax documents to get a refund or rebate. Avoid the dealership if you have the option to. Instead, go directly to the service provider and make a cancellation with them directly. This is the best route in the event that it's been more than a few days since you purchased your vehicle. Keep notes and documents on the entire process. Canceling add-ons can be difficult and frustrating So, make sure to record everything as you complete each step. Be on top of the cash. It may take weeks for your refund rebate check to come in. If it doesn't be received, call and ask when you can expect your contract to be canceled and refunded. If you financed any add-ons via your loan however, you may not be able to receive an interest refund for the amount you already paid. But, you'll be able to get the additional expense removed from your loan and receive a reimbursement on the amount that you aren't paid yet. The bottom line is that purchases of vehicles come with a adding up to a higher number than the one displayed on the vehicle window. But a savvy buyer can save money by not purchasing expensive, unnecessary add-ons. Make sure you only purchase items that are actually worth the cost and make sure you don't pay more than you intend. Related Articles
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Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She has a specialization in helping readers with the details of borrowing money to purchase a car. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since late 2021. They are passionate about helping readers gain confidence to manage their finances through providing concise, well-researched and well-researched content that breaks down complicated topics into digestible chunks.
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