Car Dealer Insurance
Coverages You Should Know
Understanding car dealer insurance and related coverages...
The 3rd of 11 essential steps in the car buying guide
This is an extremely important step that is oftentimes overlooked until after the new cars payments have been negotiated and/or the car has been purchased. Two words...
I've seen it over and over again, a customer gets so caught up in the emotion of buying a new car that they agree to higher monthly payments, then they had originally planned, and BAM! they are then hit with even higher monthly payments to insure their new car.This can be financially crippling
if you are on a tight budget.
Auto insurance is not necessarily a car dealer insurance (some dealers may offer it), but it is the most obvious of the car buying insurances to be aware of.
The most common misstep customers make customers tend to make is to overlook auto insurance rates and this can lead to a nasty surprise with a hefty jump in monthly insurance costs.
Customers come in all the time, get strapped to a big car payment, that's over their head to begin with, and then they get hit between the eyes with a $60 - $100 spike in monthly insurance costs. Don't let this be you.
Check with your current auto insurance provider, or get quotes from some online sources. It's free, usually takes only a couple of minutes and in no way affects your credit or driving record to get insurance quotes.
There is really no excuse to not get these quotes prior to buying your new car.
Remember, the contract you'll be signing for your new car will be for 5, 6 or possibly even 7 years...That's a long time to be making a steep, uncomfortable monthly payment.
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Of all the car dealer insurance available to consumers, extended auto warranties have to be the most well known and popular car buying insurance offered.
Extended auto warranties are not actually insurance; although, they serve a very similar purpose and will most certainly be offered to you as part of the car dealer insurance package.
If you like the peace of mind and/or the financial security that extended warranties offer, then you'll not only want to budget for them in your monthly payments, but you'll want to know the actual cash costs.
Most car dealers will have a $700 to $900 mark up on the extended warranties that they sell. If you run into a really greedy Finance Manager, then expect that mark up to increase to $1200, $1800 and even higher in some extreme cases.
A vehicle extended warranty will add roughly $20 to $40 per month to your monthly payments. I personally feel that they are well worth the cost, but you want to be sure you are not getting ripped off on the sale price.
FYI: In addition to knowing the costs of warranties, there are 12 essential questions that you'll want to ask about the vehicle extended warranty coverage they are offering.
Get some quotes online to get a feel for the pricing of warranties. If the dealership offers a good, solid coverage (read the contract closely) for a similar price or less, then by all means buy their warranty.
Whatever you decide to do, it's well worth the small amount of time to look into the costs of extended auto warranties prior to purchasing from the dealer.
GAP Insurance is quickly becoming one of the most popular car dealer insurance products for finance customers.
GAP insurance is a total loss protection. In the simplest of terms, in the event your vehicle is declared a total loss GAP Insurance will pay your negative equity, that your auto insurance doesn't cover, to settle the balance of your auto loan.
Car dealers know this and I've seen many of them start to increase their GAP Insurance sales prices in order to capitalize on the increased demand.
As valuable as GAP Insurance is I, once again, don't feel that customers need to be raked over the coals to buy it.
It's a shame to me if a customer were to turn this product down, because the car dealer got greedy with too large a mark up, then to have their car totaled out and owe their auto lender $6,500 or more because of a GAP in their insurance settlement.
To learn more about the benefits of this car buying insurance visit my GAP Insurance page.
Credit life insurance will payoff your vehicle in the event of your death during the term of your loan.
This is not a bad coverage, but it's important to note that this coverage is solely for your car payoff and nothing more.
Although credit life will probably be part of the car dealer insurance package that is offered to you, you are probably better off speaking with a term life insurance specialist that could probably offer a more complete coverage.
In the event you are injured and cannot work, then disability insurance would step in and make your monthly payments until you recovered.
If you were permanently disabled, then the insurer will oftentimes completely payoff your auto loan.
Same as with the credit life insurance...disability insurance will probably be part of the car dealer insurance package, but you are probably better off speaking with a disability insurance specialist for possibly better and less expensive coverages.
Neither one of the credit life and/or disability is really a car dealerships insurance specialty and most dealers tend to sell very little of these car buying insurance coverages, if any at all.
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