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 smarter financial decisions by offering interactive financial calculators and tools, publishing original and objective content. We also allow you to conduct research and compare information at no cost and 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 Earn Profit The deals that are advertised on this site come from companies that pay us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories, except where prohibited by law for our mortgage, home equity and other products for home loans. But this compensation does not influence the information we publish, or the reviews you see on this site. We do not cover the universe of companies or financial deals that might be available to you. SHARE: Maskot/Getty Images

5 min read published 27th September 2022

Writer: Rebecca Betterton Written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers in navigating the details of borrowing money to buy an automobile. Written by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate from late 2021. They are dedicated to helping readers gain confidence to control their finances by providing detailed, well-studied information that breaks down otherwise complicated topics into bite-sized pieces. The Bankrate promise

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Therefore, this compensation may influence the manner, place and when products appear within listing categories and categories, unless it is prohibited by law for our mortgage or home equity products, as well as other home lending products. Other elements, such as our own proprietary website rules and whether the product is offered in your area or at your self-selected credit score range may also influence the way and place products are listed on this site. While we strive to provide an array of offers, Bankrate does not include specific information on every financial or credit item or product. Dealer add-ons often convince buyers to pay more than they originally planned. You’ll be charged interest on any additional items included in your loan. Be aware that although you may be presented with various options of packages but you are able to decline them all. You can also choose these services on your own if you wish to only one. And later, you can stop any service at any time if decide to not need them. 1. Gap insurance Insurance that covers what you owe and the value of your car is. If your car is destroyed or taken away, gap insurance could aid in breaking even on the cost. It’s a good investment if you are — if it’s not already included within the leasing agreement. It could also be worth the cost when you’re getting an auto loan for more than the vehicle is worth. This can happen when the remainder of your old car loan is rolled into the new car payment. Still, it’s best to study the costs of gap insurance through other sources before you are aware of whether the dealer offers the most competitive price. Do you think it’s worth the cost of gap insurance? It is worthwhile to purchase gap insurance the cost if it is done at a rapid rate. The insurance will safeguard you from having to pay for the difference between your vehicle’s worth and what you owe if your vehicle is declared to be a total loss. It is important to look into gap insurance prior to deciding whether to purchase it. Banks, credit unions , and third-party sellers all provide gap insurance. You never need to purchase gap insurance from a broker, and if you find an alternative that is cheaper, you’ll have the protection without any markups from dealers. 2. VIN engraving VIN etching involves engraving the vehicle’s identification number onto your windshield and windows of your vehicle. It makes your vehicle easily identified and therefore less valuable to thieves and could be easier to retrieve should it be stolen. While they may offer discounts to drivers who use this add-on however, you can perform the work yourself and save some money. Are VIN engraving worthwhile? This add-on is not worth it. You can get this done in an after-market detail shop or build it yourself with an online kit as cheaply as $20. 3. Extended warranties kick in after the manufacturer’s warranty has expired, and typically provide less coverage. They can be more costly than the most common repairs in particular when they are paired with your auto loan. These are typically bundled with extended warranties and require the purchase of scheduled maintenance checks. The price of a service plan is typically included in your monthly car payments. Do extended warranties really worth the cost? Extended warranties are only beneficial when you anticipate owning the vehicle for a long time beyond the manufacturer’s warranty – and even then , it’s not always the best choice. Take a look at Kelley Blue Book and Edmunds for the expected repair cost and compare them to the extended warranty provided by the retailer. If you can save money for repairs while you own the vehicle, the extended warranty would cost you more. A service plan is only useful if you plan to use the dealer for maintenance and are okay with maintenance being performed in a lesser frequency than what the manufacturer suggests. If you decide to purchase one of these plans, take the time to research these from other sources. It is possible to shop around to find the best price, and you don’t have to sign up for a dealer’s extended warranty when buying a car. 4. Tire and wheel protection They can be expensive. Dealers offer tire and wheel protection to cover the cost of replacing the tires and rims when potholes, nails, or curbs cause damage to the. But most tires carry their own guarantee. If issues arise it is likely that you’ll be okay without tire and wheel protection. Is tire and wheel protection 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, then the additional protection might be advantageous. There are likely to be alternatives that are less expensive for equivalent coverage in the market without the dealership. 5. Protection for fabric and paint This add-on does exactly what it sounds like: an extra coating that dealers can add to the exterior and interior of your car to protect it from damage. Some manufacturers incorporate this feature in new models of cars So make sure you double dip on this add-on. Are paint and fabric protection worth the cost? Paint and fabric protection are not usually worthwhile additions. While keeping your brand new car in prime condition is crucial however, you can get similar results by making the neighborhood hardware shop. Consider saving money and doing it yourself. 6. Key protection depends on your car’s key and fob types, replacing one or the other can be expensive. But the additional cost of key protection provided by a company could be higher than the cost of replacing the key on your own. If you opt for key protection, compare the dealer add-on to alternatives offered by your insurance. Also, you can consider investing in technology like Tile to help you find your key if misplaced. Is key protection worth it? The add-on does not merit the extra cost. You are able to easily replace your key if it gets lost. Don’t be influenced by dealers who focus on the advanced technology that keys now have to offer. 7. Insurance for credit This feature is designed to assist you in attempting to make payments on your auto loan in the event that you are unable to. It only activates when certain circumstances occur — like death, disability or unemployment. Unlike , there is no payout for you, solely for lender. There is no requirement to purchase credit insurance when you finance or purchase an automobile and so, don’t let salespersons try to convince you. Are credit insurances worth the price? Credit insurance may be useful in an emergency, however it can cost more than creating an emergency fund. In addition, you may be able find credits insurance from a third-party at a cheaper rate. In certain instances, the insurance you already have might be sufficient to cover your costs without any additional expense. Remember: You can say no dealer will often provide add-ons as a package rather than stand-alone products. This method — which is designed to sell more items -is typically presented as the “protection pack.” It’s usually offered in various levels, including gold, silver, or bronze. It’s also known in the industry as “menu selling,” the method makes it easier for the dealership to make sure that the salesperson is able to present all the . This can make the customer feel as if these packages aren’t optional regardless of whether they are. Remember that any add-on you choose to add to your loan will cost interest. Making note of the cost in mind may help you stay solid when . How to cancel dealer add-ons Since each added-on service mentioned above is optional, you will be able to cancel them under the majority of circumstances. Check the contracts you signed. Check the time limitations or cancellation procedure. You may have to mail or fax documents to get an amount of money back or rebate. Skip the dealership if you have the option to. Instead, contact the service provider and make an appointment to cancel by contacting them directly. This is the best option if it’s been longer than a couple of days since you purchased the car. Keep notes and documents about the entire process. The process of cancelling add-ons is often complex and stressful Make sure you record all the details when you finish each step. Keep track of your amount of money. It could take several weeks for your refund or rebate check to be received. If it does not then, contact the company and inquire when to expect the contract to be canceled and refunded. If you’ve financed any additional items via your loan and you didn’t pay for them, you may not be eligible for any refunds on the interest that you’ve already paid. But, you’ll be able to have the additional expense removed from your loan and receive a refund on the amount you aren’t paid yet. The bottom line Vehicle purchases come with a adding up to a greater amount than that stated on the car’s window. A smart buyer will avoid many extra charges by not purchasing expensive, unnecessary accessories. Only purchase add-ons that are actually worth the cost and make sure you don’t pay more than you plan to. Related Articles


The article was written by Auto Loans Reporter Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers in navigating the ways and pitfalls of taking out loans to purchase cars. The article was 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 confidence to control their finances with concise, well-researched and well-researched content that breaks down otherwise complex topics into manageable bites.

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