Utility bills: $300
Health insurance: $100
New engine: $2,500?
credit union members, “saving” for unexpected and incidental
expenses – such as major automobile repairs – is not the
first item listed on the budget after the regular monthly bills.
But the fact
is, if a member is planning on purchasing a used vehicle and
driving it for several years, expensive parts will need to be
tightened, cleaned, or replaced, which could result in a
significant financial burden. For members who are not able to
save for such expenditures, a vehicle service contract can be a
service contract that is purchased at the time of sale serves as
a supplement to any remaining manufacturer’s warranty
contract can include a wide range of repairs and maintenance
protection – from bumper to bumper to just the engine.
After a member purchases a service contract, the contract
provider – be it a dealership, independent insurance company,
or other third party – is then responsible for the cost of all
future covered repairs.
dealerships include the option to purchase a vehicle service
contract at the time of sale or for a period of time afterward. Third-party
companies also offer contracts and can be found via the
important for members to purchase these contracts through a
reputable company, because the contract is only as good as the
company that backs it. For
Car Sales offers service contracts on every used
vehicle for customers’ added protection and peace of mind,
including extensive mechanical coverage, roadside assistance and
alternate transportation. These
service contracts are administered and backed by the Insurance
People of General Motors, which gives members nationwide
several types of contracts, so it is important that members
research what’s best for their particular vehicle and budget.
Some offer a choice of miles covered by the agreement,
and a period of time – such as 30,000 miles/30 months. Some
contracts cover engine components only, others offer
bumper-to-bumper coverage. They
can also come with services like comprehensive towing, battery
jump-start, tire change, and fuel delivery.
service contracts also offer deductibles, which allow members to
have a reduced up-front charge and pay a deductible should they
need to take their automobile to be serviced.
So who should
get a vehicle service contract? To
start, if a member is planning on keeping their vehicle for
several years or drives excessive miles, it may be a good idea. One
major out-of-warranty repair can easily exceed the cost of
buying a vehicle service contract. Individuals on tight budgets
also might find value in a vehicle services contract.
Owners without coverage may put off needed repairs until
they can afford the cost of the repair. This
delay may result in additional damage to the vehicle and can
create potentially unsafe driving conditions.
for a service contract, the following considerations will help
of Coverage – The extent of the repair services
varies from engines and transmission to bumper-to-bumper to
lock-outs and flat tire changes.
Some contracts list what is included in the coverage
and others list what is not covered. Typically, contracts
that list what is not covered are more comprehensive than a
policy that lists what is covered.
– This can vary in price according to the particular
important for members to note whether the deductible is per
visit or per item being repaired.
– Many service contracts offer rental vehicle
vary as to when a car is provided, number of days, cost of
vehicle per day, and extensions based on a parts delay.
and Mileage – It is important to understand when the
coverage begins. Some contracts start at zero miles and
others start at the mileage at the time of sale. Members
need to pay close attention to mileage and term options when
purchasing a used vehicle.
Policy – All vehicle service contracts should have a
cancellation policy or free look period. After the free look
period expires the contract should still include a
cancellation option with pro-rata refund.
and Tear – Some
contracts only cover failure due to defect, while others
will cover wear and tear costs such as worn fan belts and
Shops – Some contracts specify where the vehicle can
be taken for repairs. Members need to make sure the
specified mechanic is reliable and convenient.
courtesy of Enterprise