If you’re purchasing a used car, you won’t simply be purchasing the car itself. There are lots of other things that go into buying a vehicle, the least of which include gas and insurance. If you’re buying a used car in particular, it’s more important than ever to buy an extended service contract to go along with it. Why is buying an extended service contract and opting for gap coverage so vital? We’re here to tell you.
What is an Extended Vehicle Service Contract?
Before we get into the benefits of an extended service contract, not to be confused with a warranty (warranty must be given from the original manufacturer), we need to define what exactly it is. When you purchase a brand new car, you’ll be given a manufacturer’s warranty. However, this warranty is typically short, ranging from 2-3 years and up to 36,0000 miles or 50,000 miles if you get a good deal. So if you’re looking at used vehicles past these points, you may opt for an extended service contract to help pay for the cost of repairs that are sure to come in older, higher mileage vehicles.
If you’re buying a used car, there is a chance that you won’t be able to take advantage of the manufacturer’s warranty at all. In this case, it’s particularly important to opt for an extended vehicle service contract. Keep in mind that an extended service contract doesn’t cover everything. You won’t be able to use them to cover any routine maintenance such as getting new tires, new brakes, or an oil change.
What is GAP Insurance?
You might also be wondering about GAP Insurance and whether it’s worth it to purchase (Hint: the majority of the time it is). If your car is stolen or totaled in an accident, and you owe more than the insurance is willing to pay out, you are responsible for that difference! That’s where GAP insurance comes in. Essentially, this insurance pays the difference between what you owe on the vehicle, and what the insurance company has paid out. It’s important to note that this type of insurance is typically offered to those who are leasing or financing a new vehicle, so if you’re purchasing a used car, be sure to ask specifically whether GAP insurance is available to you.
Less Costly than Outright Repairs
It’s no secret that used cars tend to need more repairs than new cars. Unfortunately, repair bills can often rack up fast, and it can be a hassle to continue setting up service appointments. However, when you have an extended service contract, you know you have some type of coverage when your vehicle has some type of mechanical failure. FA Financing recommends having at least a basic power train service contract because it covers the most expensive components, the engine, and transmission. With this, one incidental from your vehicle will pay for the service contract’s cost plus more.
Additional Benefits
Having an extended service contract can actually bring more benefits than many car owners are aware of. In addition to the affordable payment plans you can access, you can also take advantage of features like roadside assistance, towing, trip protection, and rental car reimbursement. While these are benefits that many of us hope we’ll never need, they are features that will pay for themselves almost instantly if you do ever use them.
Of course, the specific benefits that you’ll find will depend on where you purchase your extended service contract. Again, FA Financing recommends at least a 1-2 year powertrain, but if your car has a lot of technological bells and whistles an electric component add-on is not a bad idea either. If you live in a hot area you might also consider an AC add-on to your service contract as well. As far as the length or duration of your service contract, a good rule of thumb is to have a service contract that lasts the duration of the loan. So bear in mind the length and how many miles you drive a year. That way you are not stuck making payments on a vehicle out of coverage with mechanical issues.
Flexibility
Your warranty from the manufacturer typically comes with quite a lot of strings. For instance, if you have a mechanical issue, your manufacturer might require you to take the car to a specific dealership or repair shop to get it fixed. However, purchasing an extended service contract from a third party often allows you more flexibility in where you take your car. That way, you can have a more secure hold on your finances and can have better peace of mind knowing you’re in control at all times.
Peace of Mind
All of these advantages to purchasing an extended service contract for a used vehicle can be summarized in one simple point: peace of mind. Purchasing and taking care of a car can be a stressful endeavor, but for many of us, it’s a necessity of life. To keep both your vehicle and your finances intact, purchasing an extended vehicle service contract can be one of the best ways to cover your car. You’ll rest assured knowing you’re not spending your entire paycheck on a repair, you have some flexibility when it comes to your chosen repair shops, and you’ll have additional benefits that you might not otherwise have access to.
Work with FA Financing
FA Financing is proud to be one of the most trusted auto lending experts in the San Diego area, holding more than 20 years of experience under our belts. We take pride in helping those who might have trouble applying for a traditional auto loan, such as those with multiple repossessions, a recent bankruptcy, or trouble proving income. Our extensive network of lenders guarantees a better chance of getting you approved, and our team here at FA Financing works to paint you in the best light, highlighting the best parts of your application to increase your chance of approval.
Working with FA Financing is easy. First, simply fill out our quick pre-approval application to get a free, no-obligation quote. You can then submit the needed documents to get an instant decision. Finally, pick a few vehicles that interest you and get started on your way to car ownership! Contact us today to learn more about how FA Financing can set you up with your perfect vehicle.
