After almost ten years in the Vehicle Service Contract Industry, or Warranty Department as most people know it as, one of the most popular questions is: When is my vehicle going to break down?
The answer, however, is not so simple. We do not know when our vehicles are going to breakdown and need to go to a shop, just like we can not predict when we are going to get sick and need to go to the doctor. The more important question we should be asking ourselves is: when my car does have an issue, how am I going to pay for it?
Do I have the funds set aside to cover my expenses in the event of an emergency?
Or would I rather factor in a premium to ensure those expenses are taken care when that does happen? Most people prefer to take the gamble, that is of course their decision, but when looking at the big picture, that is going to cost them more money in the long run.
Over the years labor rates and the price of parts have skyrocketed. Gone our the days of watching Dad work on the car on a lazy Sunday afternoon in the driveway. We have arrived in a era of computers on wheels. An era of advanced yet throw away technology, and our vehicles are no exception to this. Every year a new line of vehicles are brought on to the market with all the latest and greatest new features. Back-up cameras, DVD players, Sate light radio, On star navigation, just to name a few.
When you break it all down, more features means more components to go out and break on the vehicle, which in turns means more money for the service facilities and dealerships.Walking into a service facility when our vehicle is having an issue is a stressful situation in itself. The wait is even more daunting. We have zero control at this point. We are at the mercy of the service department, all we can do is sit and wait. Than the inevitable happens, the service technician comes out and rarely is there ever just one simple thing on their diagnostic report when they emerge from the service bay.
Now here comes the kick in the pants, one that most people never see coming, you owe something to the facility regardless if they fix what is on that report or not. The shops time is valuable as well as our own. Some shops have a flat diagnostic fee, others charge their hourly labor rate for the diagnostic instead. So for example: if the shop has an hourly rate of $100 per hour to work on your vehicle (and that is low for what most shops charge, depending on your area) and the vehicle has been in the shop for two hours at this point you now owe the shop $200 plus tax and have not even got the vehicle fixed yet. Now an already stressful days gets even worse. Either way you are out $200 plus at this point.
So back to our original question: to Warranty to not to warranty?
Do you have the emergency funds to make sure the vehicle is in operational order moving forward? If you are like myself coming up with those funds out of the blue would be impossible. Not to mention add to an already over stressed budget. If you are comfortable with your budget and can spare funds in the event of an emergency, than maybe coverage is not a big deal to you and your family.
If even a night out has to be carefully planned in advance to work the rest of your monthly expenses than, yes, a vehicle service contract is definitely something that should be added into your finances. Let us say that you are right in the middle. Living expenses are comfortable, bills are paid on time, some extra money set aside at the end of each month. Would you rather spend a small deductible to get your vehicle operable again, or drain the resources you have spent some time accumulating on one issue? It might not be a big deal the first time around, I mean that is what “emergency” accounts are for, right? Than you have another emergency come up, whether or not it is with your vehicle is irrelevant at this point. It could be medical, it could be a loss, or even something with your home. Your account has been depleted and the majority of the time there is not enough time in between to get that account balance worked back up.
Now you are stuck. There are very few options at this point, you can borrow money from a family member, you can see if the bank will let you take out a loan ( and you will have application fees and interest ) It all becomes a domino effect moving forward. Taking even longer to get back to where you started being ahead with money. So to warranty or not to warranty your investment, that is your vehicle, your source of freedom to get around with your day to day responsibilities. Whether that be to and from work, the doctor, or even just to the market once a week. The question everyone really should be asking themselves is when my vehicle does breakdown where is that going to leave me financially? How am I going to pay for the parts, the labor rate, and the diagnostics when my vehicle has an issue? Would it leave you on Ramon noodle rations? Would it be a minor hindrance to your savings account. Either way wouldn’t you rather have the peace of mind to know that you are not going to have to break into a sweat waiting it out at the service facility, or would you rather hand over a blank check and be at the mercy of service technicians. Inevitably all vehicles breakdown. All repairs are going to cost money. All coverage are going to cost money as well, but in the long run they all save you money and come with peace of mind and that is priceless.