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Car loan add-ons: Are they worth it?

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When purchasing a vehicle, you will likely be met with add-ons that range depending on the automaker. But they can stump buyers into spending more than intended. Educate yourself on common add-ons and which extras are actually worth it before heading into a dealership.

Determining what you should buy is dependent on your need for it along with the cost. Keep in mind that while you may be presented with many choices of packages, you can decline them all. You also can negotiate these car services individually if you want just one. Later, you can also cancel any services if you decide you don’t want them.

1. Gap insurance

Gap insurance pays the difference between what you owe and what your car is worth. It is a smart buy if you are leasing a car — if it’s not already included in the lease agreement. Gap insurance might also be worth the cost if you are getting a car loan for more than the car is worth, which can happen when the remainder of your previous car loan is rolled into the new car payment. Still, it’s best to research the costs of gap insurance through other sources first so you know if the dealership is offering you the best price.  

Is Gap insurance worth it?

Purchasing gap insurance is worth it if your new vehicle will likely depreciate at a fast rate. Having it will protect you from having to pay the difference between your vehicle’s worth and what you owe if the vehicle is declared a total loss.

2. VIN etching

VIN etching is engraving that can be found on the windshield of your vehicle. It is made up of your vehicle identification number and is used to fight against potential theft. It makes your vehicle easily identifiable and thus less valuable to thieves. Although insurance companies will sometimes offer discounts for drivers who do have this add-on, you can also do this yourself.   

Is VIN etching worth it?

This add-on is not worth it. You can easily get this done at a detail shop later or even with an online kit and can pay as little as $20 for the process. 

3. Extended warranties

Extended warranties kick in after the manufacturer’s warranty has expired, but typically cover even less. Service plans are usually lumped in with extended warranties, and involve purchasing scheduled maintenance checks. The price of a service plan is typically rolled into your monthly car payment.

Are extended warranties worth it?

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. A service plan is only useful if you are sure you will want to go to that dealer for your service, and are fine with maintenance potentially being done on a less frequent basis than what’s recommended by the manufacturer. 

If you purchase either of these options, take the time to research these service costs from other sources.

4. Tire and wheel protection

Tires can be very expensive. It is likely dealers will offer tire and wheel protection, an add-on that will cover the cost to replace the tires if they are damaged by say, potholes, nails or curbs while you are driving. But what you should keep in mind is that most tires carry their own warranty, so if issues were to arise without having protection from the dealership you will likely still be okay. 

Is tire and wheel protection worth it?

This add-on depends on your driving experience, if you live in an area where you are more likely to run into issues with your four wheels then it could be beneficial to look into the extra protection. But otherwise, you can most likely find cheaper options for the same amount of coverage outside of the dealership. 

5. Paint and fabric protection

This add-on is exactly what it sounds like, extra coating that dealers can add to your vehicle’s interior and exterior to protect it from damage. Although keeping your new car in prime condition is important, you can get the same results through a trip to your local hardware store. Consider saving money and doing this yourself.  

Is paint and fabric protection worth it?

Often it is not a worthwhile add-on. Although it can sound appealing to keep your new set of wheels in the same condition it was when you drove it off the lot — this is not the way to do it. You can easily maintain the new car smell through your own maintenance and general vehicle upkeep. 

6. Key protection

Unlike in the past, you can not easily make a copy of your lost key at a locksmith. Due to the advanced technology that keys now hold, many dealers will push you to purchase key protection. This additional cost will likely cost you more than the price tag to replace a lost key on your own. Many insurance companies offer key protection that is much less expensive. Along with this, if you are worried about the loss you can invest in technology like Tile, which you will track your key. 

Is key protection worth it?

This add-on is not worth spending extra money on. You can easily replace your key if it is lost. Do not be swayed by dealers who are focused on the advanced technology that keys now have to offer. 

You will pay interest on add-ons

It is important to remember that you will have to pay interest on any add-ons that you do decide to purchase with your vehicle. With this in mind, be very clear on exactly what’s included and what will happen to your money if something were to happen to the company that backs these products when discussing with the dealer.

Often, dealers offer add-ons as a package instead of as stand-alone items. This strategy — designed to sell more items — is often presented as a “protection package” and usually is offered in three levels, grouped by bronze, silver and gold. 

Known as “menu selling,” this approach makes it easier for the dealership to ensure the salesperson presents all the extra items or services the dealership offers. It also gives the dealer an easy way to make the customer feel as if these packages are not optional even if they are.

The bottom line

Vehicle purchase comes along with a laundry list of additional costs that add up to a number much higher than that advertised on the vehicle window. Do your best to only purchase add-ons that are truly worth your while and not to be swayed into spending more than intended. 


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Written by
Rebecca Betterton
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.
Edited by
Auto loans editor