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Car loan add-ons are they worth the cost? Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our goal is to help you make better financial choices by offering you interactive tools and financial calculators as well as publishing objective and original content. We also allow you to conduct your own research and compare information for free to help you make sound financial decisions. Bankrate has agreements with issuers, including but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The offers that appear on this site are from companies that compensate us. This compensation could affect how and when products are featured on this site, including, for example, the order in which they appear in the listing categories and other categories, unless prohibited by law. This applies to our mortgage home equity, mortgage and other home lending products. But this compensation does affect the content we publish or the reviews appear on this website. We do not cover the universe of companies or financial deals that might be accessible to you. SHARE: Maskot/Getty Images

5 minutes read. Published 27th September 2022

Writer: Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in helping readers in navigating the ways and pitfalls of borrowing money to purchase an automobile. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since the end of 2021. They are dedicated to helping readers gain the confidence to control their finances by providing detailed, well-studied facts that break down complex subjects into digestible pieces. The Bankrate guarantee

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This compensation could impact how, where and when products are listed in the event that they are not permitted by law. We also offer mortgage, home equity and other products for home loans. Other factors, such as our own proprietary website rules and whether or not a product is available in your region or within your personal credit score could also affect the way and place products are listed on this site. We strive to provide a wide range offers, Bankrate does not include information about every credit or financial item or product. Dealer add-ons can be a way to convince customers to spend more than intended. And you’ll pay interest on any additional items included in your loan. Keep in mind that while you may be presented with several options however, you may choose to reject them all. You also these car services individually if you want only one. Later, you may cancel any services if you decide you don’t want them. 1. Gap insurance Insurance that covers what you owe and your car is worth. If your vehicle is damaged or taken away, gap insurance could assist you in reducing expenses. It’s a good investment if you are — if it’s not already covered as part of the lease contract. Gap insurance might be worth it in the event that you’re taking out an auto loan that is greater than what the car’s value, which can happen when the remainder of your old car loan is transferred to the payment for your new car. Still, it’s best to investigate the cost of gap insurance through other sources first so you can determine if the dealer offers the most competitive price. Is gap insurance worth it? It is worthwhile to purchase gap insurance it if at a fast rate. Having it will protect you from having to pay for the difference between your vehicle’s worth and the amount you’ll owe in case your vehicle is declared to be a total loss. However, you must compare gap insurance before you purchase it. Credit unions, banks and third party sellers offer gap insurance. You never need to purchase gap insurance from a broker or broker, and if you discover cheaper rates elsewhere you’ll get the coverage without dealer markup. 2. VIN engraving VIN etching is the process of engraving the vehicle’s identification number on your vehicle’s windows and windshield. It makes your car easily identifiable , making it less valuable to thieves, and possibly easier to locate should it be stolen. Although will sometimes offer discounts to drivers who use this add-on but you can do it yourself and save a few dollars. Is VIN Etching worth it? This isn’t worth it. You can get this completed at the detail shop in the future or build it yourself by using an online toolkit for just $20. 3. Extended warranties kick in after the manufacturer’s warranty has expired, but typically provide less coverage. They are often more expensive than repairs that are more common, especially when combined with your car loan. are usually lumped in with extended warranties, and can involve the purchase of scheduled maintenance checks. The cost of a service plan is typically added to your monthly car payment. Do extended warranties really worth the cost? Extended warranties are only beneficial if you expect to own the car well past the manufacturer’s warranty – and even then it’s not always the right choice. Check Kelley Blue Book and Edmunds for estimated repair costs and then compare them with the extended warranty offered from the dealership. If you can save money for repairs when you own the car, an extended warranty could be an unnecessary expense. The service plan is helpful if you intend to use the service center for maintenance and can accept maintenance occurring at a lower frequency than the manufacturer recommends. If you choose to buy one of these plans, make sure you research the other options available. It is possible to search around to find the best price. Also, there is no requirement to accept a dealer’s extended warranty when buying a car. 4. Tire and wheel protection Tires can be very expensive. Dealers offer tire and wheel protection to cover the cost of replacing the rims and tires when potholes, nails, or curbs damage them. But most tires carry their own guarantee. If there are any issues however, you’ll likely be okay without tire and wheel protection. Do you think tire and wheel protection is worth the expense? The value of this add-on is contingent on the driving conditions you have experienced. If you reside in a region that has notoriously rough roads, looking into the extra protection could be advantageous. There are likely to be lower-cost options with equivalent coverage outside the dealership. 5. Fabric and paint protection This is exactly what it sounds like: an extra coating that dealers can put on the exterior and interior of your car to guard against damage. Some manufacturers include this with new car models Make sure to double-dip on this add-on. What is the value of fabric and paint protection? worth the cost? Fabric protection and paint are not usually worthwhile additions. Although keeping your new car in top condition is essential but you can achieve similar results by making visiting your neighborhood hardware shop. Consider saving money and doing it yourself. 6. Key protection is contingent on the car’s key and fob models, changing one or the other can be expensive. However, the cost of key protection offered by a particular manufacturer could be more expensive than replacing the key on your own. If you decide to purchase key protection, you can compare the dealer add-on to the options provided from your insurance. You also can invest in technology like Tile to help you find your keys if they are lost. Is key protection worth it? It’s not worth the extra cost. You can easily replace your key in the event that you lose it. Don’t be influenced by dealers who are focused on the latest technology keys today have to offer. 7. Insurance for credit This option is designed to help you pay off your auto loan if you cannot. It only works in certain situations — like death, disability or unemployment. Unlike , there is no payout for you, solely for lender. It is not required to purchase credit insurance to finance or buy a car, so don’t let salespeople try to convince you. Is credit insurance worth the price? Credit insurance can seem useful in an emergency, but it may be more expensive than building the rainy day fund. Additionally, you might be able to get credits insurance from a third-party at a lower rate. In some cases your insurance coverage you have might be sufficient to cover your expenses with no additional cost. Keep in mind that you can say no dealer will often provide add-ons as a package rather than stand-alone products. This approach — created to increase sales of itemsis typically described as an “protection bundle.” It’s usually offered in the form of levels such as gold, silver, or bronze. Also known in the industry as “menu selling,” such a strategy makes it easier for the dealership to make sure that the salesperson is able to present all the . This can cause the client to feel that these services aren’t available even though they are. Keep in mind that any extras you choose to add to your loan is likely to cost you interest. Making note of the cost in mind may help you stay in the right direction in the event of a dispute . How to stop dealer add-ons added-on service mentioned above is voluntary, you’ll be able to cancel them under most circumstances. Examine the contract you signed. Examine the time limit or cancellation procedure. You might have to send or fax the documentation in order to receive a refund or rebate. Do not visit the dealership if are able to. Instead, go directly to the service provider and make a cancellation with them directly. This is the most efficient method for if it’s more than a few days since you purchased your vehicle. Note down any documents and notes on the process. Cancelling add-ons can be a bit complicated and annoying, so write everything down after you have completed each step. Be on top of the money. It could take several weeks for your refund or rebate check to be received. If it does not, follow up and ask when to expect the contract to be cancelled and then refunded. If you financed any add-ons through your loan however, you may not be eligible for an interest refund for the amount that you’ve already paid. But, you’ll be able to have the additional expense removed from your loan and get a rebate on the amount you didn’t pay yet. The bottom line is that purchases of vehicles can add up to more than that stated on the vehicle window. However, a smart buyer can save money by avoiding costly, unnecessary add-ons. Make sure you only purchase items that are actually worth the cost and make sure you don’t pay more than what you want to. Related Articles

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This article is written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers in navigating the ins and outs of securely borrowing money to purchase a car. Written by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since late 2021. They are dedicated to helping readers gain confidence to take control of their finances with precise, well-studied information that breaks down otherwise complex topics into digestible chunks.

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