Are Finance Products for Your Car Worth It?

There are many tips on finding a vehicle that isn’t a lemon on a car sales lot by doing a lot of research before going to the dealership. But, one thing that often gets overlooked when finding a good deal is the added costs that go into finalizing your financing. All the extras sound great, but are the finance products really worth it?

According to Bankrate, some services could be worth the extra money, while other items are not. Which ones should you avoid, and which ones are worth looking closer at?

What costs go into financing a vehicle when car buying?

A person holding out 10-$100 bills for finance spread out.
Finance money | Getty Images

When you’re car shopping, you typically find a vehicle of interest and begin negotiating with the dealer. A price is agreed upon for the vehicle, and you head inside to finalize the sale of your purchase. The total price you end up paying for the car is way more than the actual sticker price. 

If you’re financing the loan, you’ll be paying for interest, which is simply extra money added to the loan for the privilege of making payments to own the car. According to Car Connection, the dealer will add other costs like taxes, title fees, and document fees.

The trade-in value of the car or down payment will lower the final cost of the vehicle. Once all that’s figured out, the papers are printed out, and you sign on the dotted line, receive your keys and drive home in your new car. 

What extras aren’t worth paying for in your financing loan?

When financing a vehicle, you can add numerous other options to your purchase that will increase the price you ultimately pay for the car. While they may sound like a great option to take, some really are just a waste of your time and money. 

One extra that you should avoid is an extended warranty. Usually, the car comes with one already through the dealership. The extended warranty will often come with unrealistic expectations. For example, you might have to have the car maintained only through their service department, which is three hours away from you. If you don’t, the warranty is voided and won’t cover repairs when you need it most. 

Other services that aren’t worth paying for include paint protection, VIN etching, life insurance, and fabric protection. You can certainly get these services, but paying the dealership to do it will likely cost you tons more, especially since you’re paying interest on the whole auto loan, which services like this are added to.

Which extras might actually be beneficial for car buying?

There are some services they offer that might actually be worth your while, depending on your situation. Gap insurance is good if you’re adding the remainder of one loan to your new car loan. 

This way, if the vehicle is totaled, the gap insurance will pay the difference between the amount your insurance pays out and the amount you own on the vehicle. Otherwise, you will have to pay out of your pocket whatever remains and not get a car for it. 

Anti-theft services might be worthwhile if you live in an area where your vehicle could get stolen. If the price is right, it might just be worth it for peace of mind. However, shop around before signing on the dotted line to see if you can find something elsewhere for less. 

Buying a car is an investment and will cost you quite a bit of money. Adding services to the loan may or may not be a good idea. You can keep your costs down by knowing what services you need and if you can get them for cheaper someplace else. 

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