If you've considered keeping your current vehicle a little longer it's important to protect your continuing investment and finances with an extended vehicle service contract. You’ll come out money ahead, stay protected and have peace of mind!
Many of our customers are tempted to keep driving their vehicles after they’ve made the last payment. But, the end of car payments often signals the beginning of mechanical problems that can cost thousands of dollars in unexpected and untimely repairs. That’s where an extended vehicle service contract makes sense.
A well maintained vehicle should still be running long after the odometer has reached 100,000 miles. Keep driving it and you save money not only because you won’t be making payments on a new vehicle, but also because insurance premiums are lower, and in some states, so are registration fees and personal-property taxes.
Unfortunately, at some point the cost of maintaining that old chariot will outweigh the “no monthly car payment” money savings. We see this in our service department all the time and the money you’ve been saving, by not buying a new vehicle, gets unexpectedly (and sometimes all at once) gobbled up by a major mechanical or computer systems malfunction.
The question is: Where's the tipping point? How long does it take for the higher cost of purchasing a new vehicle to be justified by the growing or unexpected cost of maintaining/fixing the old one?
It’s longer than most people think. The actual numbers are less important than the overriding message: A 79,000 mile pre-owned vehicle with a service contract (extending major component protection up to 120,000 miles) is easier on your monthly budget. That’s because the monthly cost of a 48,000 mile Protector Vehicle Service Contract is, on average, 1/3rd the cost of the average monthly car payment (estimated at $378 over 63 months according to one recent report). But keep in mind your vehicle service contract will be paid off after 18 months leaving you with plenty of protection and peace of mind but no monthly payments left to make.
Of course, there’s no replacement for that “new car smell” and improved performance we understand that budgets are tight today. By running estimated numbers you can see what makes most sense for your situation. Here are some strategies for further minimizing the impact of monthly payments on an extended vehicle service contract or new vehicle purchase.
Pay cash. This will reduce your total expense by eliminating the interest on the loan. You should also take into account the interest difference between the new vehicle purchase financing and the interest charged when financing an extended vehicle service contract.
Pay a lower interest rate (we like zero %). A lower rate means more money in your pocket. Because you are purchasing a Protector extended vehicle service contract online we are able to control our costs. We pass that savings onto you in the form of zero % financing of your service contract purchase.
Buy a used car with an extended vehicle service contract. The problem is that, unless it is a certified used vehicle, a used car doesn't come with a new-car warranty, so you take on the same risks of unanticipated high repair bills that you already have with the car you’ve got. "Certified used" or "certified pre-owned" cars are often two or three-year-old previously leased cars. They’re offered by dealers and feature warranties that extend beyond the initial "when new" coverage.
A certified vehicle has a warranty that is backed by the original vehicle manufacturer. Terms differ, but a true certified pre-owned program will include at least a 100-point inspection of the car. Ford’s program includes:
Certified pre-owned cars are usually more expensive than other used cars. But the benefits may outweigh the cost—for many buyers, the peace of mind alone is enough to justify the extra money.
But let's be truthful: When all is said and done, most of us don't base decisions on such a detailed accounting of the costs. Comfort, style, image, safety, convenience and reliability are the forces motivating the majority of Americans who decide to buy a new car. The important thing is to choose the right vehicle, the right amount of protection (whether included by the manufacturer or extended by your purchase of an extended vehicle service contract) and to get the best possible deal.
