Even if you pay in cash, buying a car can be expensive. The average new car price is $48,841, as per Kelley Blue Book. Even used cars average at around $25,512. And then there’s annual maintenance, car insurance, gas, taxes and other costs to consider.
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If you’re a retiree in the market for a vehicle, there is one specific feature car experts suggest getting. It’ll cost you a little extra, but it’ll be worth it for the peace of mind.
Always Get a Vehicle Service Contract
No matter what vehicle you get, chances are it’ll need repairs at some point. According to ConsumerAffairs, it costs an average of $900 every year to maintain a car. Luxury vehicles, like Porsche, cost an average of $1,623.
One way to negate these high costs — especially if you’re a retiree on a fixed income — is with a vehicle service contract.
“For retirees especially, I would recommend buying a vehicle service contract,” said Ryan Hartman, car expert and co-founder of Chaiz, an online marketplace for car extended warranties.
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According to the Consumer Financial Protection Bureau, a vehicle service contract, or extended warranty, can cover certain repair costs that the regular manufacturer’s warranty doesn’t. It may also extend the length of your existing warranty.
Covered costs may include things like mechanical or electrical parts replacement. They may also include roadside assistance, key fob replacement and new tries. Routine maintenance, like oil changes, aren’t always covered.
“With a vehicle service contract, you can take your car to any ASE certified mechanic, eliminating the need to haggle with several local repair shops (and helps with avoiding getting ripped off),” said Hartman.
Plus, having one can safeguard your retirement savings. As long as you have the coverage, you won’t have to pay for those large repair bills out of pocket.
What Do Vehicle Service Contracts Cost?
Per the Federal Trade Commission, costs can vary significantly depending on:
- Extended warranty length
- What it does and does not cover
- Vehicle make and model
- Intended vehicle use
- Whether the vehicle is new or used
You can expect to pay several hundred or even several thousand dollars on a vehicle service contract. Depending on the terms, you may also need to pay a deductible whenever a repair comes up.
Even with a service contract, you’re still technically paying for any anticipated maintenance. These costs are just spread out over time, making them easier to handle if you’re on a tight budget.
Where To Get One
You can get a vehicle service contract from the dealership, but that’s not always the best option.
“I wouldn’t recommend [buying] from the dealership, as they often mark up the contracts significantly, but I would recommend shopping online and comparing pricing and plans,” said Hartman.
You can even get a contract after you’ve left the dealership. Hartman noted that you may even get a better price — and possibly better coverage — if you go through a third-party service or independent company.
Compare several companies and options to ensure you’re getting the coverage you need. Check for any limitations, coverage length differences and prices.
Also, take the time to review the contract terms alongside any expected repair costs to decide if it’s worth getting one. For example, a new tire could easily cost $100 to $200 — or more — according to J.D. Power. If you need to replace all four, and your contract covers it, that’s some major out-of-pocket savings. And if you’re living on Social Security, that contract could be a lifesaver.
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This article originally appeared on GOBankingRates.com: The One Vehicle Feature That’s Always Worth the Money for Retirees, According to Car Experts
