What is a Vehicle Protection Plan?

What is a Vehicle Protection Plan?
What is a Vehicle Protection Plan?
Education
| Aug 26 2022
facebook icontwitter iconlinkedin icon
back arrow iconBack to All News
Vehicle Protection Plans: Your Guide to Extended Warranties

When you buy a product, you want some degree of confidence that you're buying a quality product. That’s where warranties come in. Most products these days come with warranties, from your television to your hairdryer to your phone to your laptop case. But all of these, while they can be major purchases, pale in comparison to the cost of a new car.


So when you have something as expensive as a new car, you may want a little extra assurance that if something goes wrong, you're covered. But the problem with warranties is that they come with an expiration date. While you may be covered for a few years, you may feel kicked to the curb when the warranty expires—or you may lose coverage when you refinance and need a new protection plan.


Vehicle protection plans were created to take over when standard warranties end, and maybe even supplement your manufacturer’s warranty. But how do you decide if a vehicle protection plan is worth it?


Let’s talk about what vehicle protection plans are and how you can decide if getting one is right for you.



What is a vehicle protection plan and what do they cover?

A vehicle protection plan offers additional coverage on your car for maintenance and repairs. Vehicle protection plans can be used in conjunction with your manufacturer’s limited warranty or can be used when the limited warranty expires.


First off, let’s talk about what warranties are. A warranty is a company’s guarantee of their product. They are typically offered by manufacturers to give customers some peace of mind that they are buying a quality product. Most new cars these days come with a limited warranty, either a limited bumper-to-bumper warranty, a limited powertrain warranty, or both. Limited bumper-to-bumper warranties cover most things that can go wrong on your car, generally only excluding things like wear and tear and theft. Limited powertrain warranties cover the parts of your car that make the car actually drive, like the drivetrain or the transmission. It is common for dealers to offer a three year limited bumper-to-bumper warranty and a five year limited powertrain warranty. This gives owners an additional two years of coverage for the main components of the car.


When these warranties expire, customers may feel a little unease. Or maybe their dealer is only offering powertrain warranty, and the buyer wants to add on more protection. That’s when a vehicle protection plan takes over. 


Vehicle protection plans vary a lot in what they cover from plan to plan. But in general, a protection plan will cover repairs on:


  • Engine
  • Transmission
  • Drive Axle
  • Electrical Components
  • Brakes
  • Suspension
  • And more


Specific coverages will vary from policy to policy, but these repair costs can really add up. A new transmission can cost anywhere from $2000 to $3500, while an engine rebuild can cost between $2500 and $4000. 


Think of it this way. You have a four year loan on your new car that comes with a three year bumper-to-bumper warranty. Just as your warranty ends, your transmission goes and it will cost you $3,000 to fix on a car that isn’t even fully yours yet. That can really set you back. But if you had a vehicle protection plan, you would not be responsible for that cost.



Is it worth it to get a vehicle protection plan?

Vehicle protection plans are a great option for a lot of people. But for others, they might seem expensive and unnecessary. Getting a vehicle protection plan might not be worth it if any of the following apply to you:


  • You prefer to work on your car yourself and avoid taking it to a mechanic at all costs
  • It’s your secondary car that you do not rely on–a rental car or a few weeks in the shop won’t be an inconvenience for you
  • You are thinking about getting rid of your car in the very near future


But for many, vehicle protection plans can be well worth it. Especially if you are able to add it on easily to your car payments, like you can when you refinance with Auto Approve. By rolling your vehicle protection payments into your car payments, you can bundle everything and save a lot of money. 


Vehicle protection plans can give you peace of mind. 

If you don’t have an emergency fund saved up, a vehicle protection plan can give you some much needed peace of mind. For many of us an unexpected breakdown can throw our lives into disarray. Our finances take a hit AND we need to worry about towing and rentals. You may suddenly be on the hook for a $2000 repair, a $150 towing bill, and $300 for a few days with a rental car. Not only is this a lot to wrap your mind around, but it’s a lot of money that you suddenly need to scrounge together. But if you have a vehicle protection plan you do not need to worry as much and can save yourself one big headache.


There are often extra perks.

Depending on your vehicle protection plan, there may be other perks that come along with it. Let’s look at the kind of vehicle protection plan you can get when you refinance your car with Auto Approve. In addition to covering a host of mechanical and electrical issues that may arise with your car, a vehicle protection plan offers:


  • 24/7 roadside assistance
  • Up to $50 per day rental reimbursement
  • Courtesy towing
  • Your choice of certified-ASE mechanic


All of these perks can really add up, especially when you think about paying for the repairs on top of the towing, roadside assistance, and rental car. And since you are covered by a certified-ASE mechanic, you know that you can get your repairs done quickly and correctly.


It can help you budget for emergencies.

When you have a vehicle protection plan, you won’t get hit all at once with a large repair bill. A large repair bill is something that many Americans can’t easily handle. After all, only 42% of Americans report having an emergency fund. This number has dropped from 54% in the past two years as our economy has been on a rollercoaster. But if you have a vehicle protection plan you don't need to worry as much about having an emergency fund set aside. Instead you can pay a little bit every month for the protection, which will help you budget for the unexpected. 



What should you consider when choosing a vehicle protection plan?

If getting a vehicle protection plan sounds like a good move for you, there are many plans out there from which to choose. Cost, coverage, and customer satisfaction are among the chief concerns you probably have when choosing a plan. Be sure to ask the following questions as you start researching plans:


  • How much does it cost? Will the cost more than likely outweigh your savings? Is there an initial upfront payment or just monthly payments? If you are able to bundle the cost it can be much more budget friendly.
  • What specific parts and repairs are covered? Get a detailed list so that you know exactly what is–and isn't–covered. You know your driving habits and your car better than anyone so you can decide what level of coverage you will need.
  • Is it transferable? If you are considering selling your car and getting a new one, you might be able to transfer your policy to your new car.
  • Do you already have coverage? Some insurance plans or other services like AAA may already cover some of the benefits of a vehicle protection plan. 
  • What mechanics can you use? If the list of mechanics is super restrictive, it may not make sense to get the plan. After all, what good is the plan if it will only pay for repairs somewhere that is too far away? Make sure the plan will cover a certified mechanic so you can ensure the repairs are done correctly. 
  • Is the provider trustworthy? You want to make sure that the company arranging and providing the warranty has a good customer service rating. Bad customer service is the last thing you want when dealing with an emergency repair. 
  • How long of a commitment is the plan? Can you stop coverage at any time or do you need to commit?


Asking all of these questions can help you narrow down the list of possible providers and help you select the best plan possible. 



That’s everything you need to know about vehicle protection plans.


Vehicle protection plans can be a great option for car owners who’d like a little more extra comfort. And while some plans can be expensive while not providing a whole lot, there are some that offer a great bang for your buck.


If you refinance your car with Auto Approve, you can easily add on a vehicle protection plan that is unmatched in its coverage and perks. So don’t wait, get started with a free quote and start saving today!

Resources
Finance
5 Reasons to Refinance Your Vehicle with Auto Approve
left arrow logo
Finance
Is Now A Good Time To Refinance a Car? Fall 2022
left arrow logo
Education
Cars Over 10 Years Old: Warning Signs to Watch Out For
left arrow logo
Resources
Call Now