These products may help reduce the amount owed when the proceeds from your insurance company are not enough to pay off the remaining balance owed. In this case, the difference is called the “gap.” Auto insurance companies typically pay the value of your car rather than the amount remaining owed on your loan. If you finance a significant portion of your auto purchase, then you may owe more than the value of your car. If you financed the purchase of your car, the Guaranteed Asset Protection (GAP) insurance and GAP waiver generally provide protection when your car is stolen and not recovered, or damaged beyond repair and declared a total loss through theft, accident, or other causes. The Federal Trade Commission provides more details on the difference between Service Contracts and Extended Warranties. Extended Warranties are common on Certified Pre-Owned vehicles, where the manufacturer extends the factory warranty on late model, low mileage pre-owned vehicles that undergo a detailed, multi-point inspection and reconditioning process. Prices vary a great deal based on your vehicle, length of coverage and miles driven, and usually require a deductible.Īn Extended Warranty differs from a Service Contract in that it can only be offered by the manufacturer. These plans generally provide coverage after the manufacturer's warranty expires. MOST COMMON PRODUCTS Vehicle Service Contract or AgreementsĪ Vehicle Service Contract pays for specified mechanical repairs or services. Please refer to your product agreement for complete details. Know who offers the product: Generally, these products are offered for sale by the dealer or a third-party provider. Questions related to the products or purchase should be directed to the dealer, seller or provider.If the product can be canceled, you may seek a refund of any eligible unused portion if you pay off your finance agreement early, or sell or trade your vehicle prior to the product's maturity. While some products can be canceled, others may not.
It's also important to be aware of any product cancellation provisions. With this information, you can better determine if the product is valuable for you based on your situation. Understand the details: Don't purchase any product you don't want or fully understand, or don't think you need or can afford.Get the facts: Be sure the dealer provides all the details, terms and conditions related to any Voluntary Protection/Aftermarket Products you may be interested in.Be informed: You're not required to purchase any of these products when you buy or finance a vehicle.While we can't tell you if these products are right for you, we can help you understand what to consider before purchasing or financing these products. Be aware that no matter how these products are presented, you're not required to purchase or finance as part of the sale. These may be presented either during the negotiation, at the closing, or occasionally by “pre-loading” into the vehicle price via a window price addendum. Voluntary Protection or Aftermarket Products may be offered by your dealer when purchasing or leasing your new car.
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