Vehicle costs are something else these days. AAA reports that the annual cost of new car ownership is about $10,728 (or $894 a month). Unfortunately, the surging prices of new cars and trucks are directly pushing many vehicle owners further into debt. New auto loans are at a record-high $40,290, and used vehicles now average $28,534. In San Antonio, used car prices rose 50% in just one year.
The situation may have forced you to get creative. Perhaps you’re holding on to your car longer than expected or purchased a used car without a warranty. But those, too, hold risks. Supply and labor bottlenecks have caused auto repair costs to soar as well. Motor vehicle parts and equipment costs are up 15%, which is the largest increase since 1974. Another factor driving up repair costs on older vehicles is technology. Now more than ever, parts needing repair can electronically impact other elements or have software components requiring special equipment or skills, which means many of us can no longer fix our cars ourselves.
One solution to help reduce these added costs is an extended auto warranty, also known as a Vehicle Service Agreement (VSA). For any car past its factory warranty or with more than about 50,000 miles, a VSA could be a smart safeguard.
“It’s something I personally wouldn’t have considered before, but with repair costs and how specialized car repairs are these days, an extended warranty could save you thousands by the time you finally get that new car,” says CPS IBEW FCU President Adam Conine. “Instead of repair costs adding up, a VSA can help keep both your car and your pocketbook in good shape.” For that reason, CPS IBEW FCU currently provides its members access to VSA insurance. The coverage is similar to a manufacturer’s warranty with options that follow most manufacturer guidelines along with other benefits like car rental, roadside assistance, trip interruption protection and towing. There are even coverage options for hybrid and electric vehicles.
Members can also access Guaranteed Asset Protection (GAP) insurance to further reduce the risk of owning an older car that is still under loan. GAP insurance does just that: it bridges the “gap” between what you owe on an auto loan and what collision or theft coverage will pay out if something happens. GAP insurance also makes sense when securing a loan with a small or no down payment or if you fear an auto loan will “go upside down” (you owe more than the vehicle is worth) after a trade-in or if it’s a high-usage vehicle that might depreciate faster than usual. Don’t forget that, when the time comes to buy or refinance, CPS IBEW FCU also offers auto loans with lower monthly payments than typical dealer loans.
Check out the insurance options your Credit Union membership provides you and consider what you might lose by pushing ahead without financial safeguards backing up you and your aging vehicle.
