What exactly do I mean when I say “add-ons”? When you buy a new car, you do the negotiating, agree on price with the sales person. Then you move in to the office with the finance person. That is where they try and sell you the “add-ons”. This is one of my favorite Simpson moments. Yep, here we go with the add-ons.

So today we are going to talk about the pros and cons of these “add-ons”. My dealer offers:

• Wheel and tire insurance
• Extended Warranties
• Gap Insurance
• Key replacement
• Simoniz or other paint/interior treatment
• Security Coding

Wheel and Tire Insurance

Out of all the extras that F+I people try and sell you, this is the best(in my opinion). This plan can cover damage to a wheel, and or repair/ replacement of a tire. If you hit a pot hole and bend a wheel, they will pay for repair or replacement. If a wheel face gets scuffed at a drive-thru the insurance company will repair or replace it.

The same goes for tires. In Shop Shots Volume 58, I posted a picture of a tire that was damaged by a nail. The tire required replacement. The customer had purchased the tire insurance, so she didn’t have to pay the $180 for a new tire. It only takes a couple of repairs to fully pay for this insurance.

BUY OR DON’T BUY: This is one that I say BUY! If your car has upgraded wheels and tires, it is a definitely buy.

Extended Warranties

This would be a warranty on mechanical failures of your vehicle. I have dug deep in to this before. You can read more about Buying an extended warranty for a car. Here is the short version. There are many factors that go into this decision.

• Do you have extra cash on hand to pay for repairs?
• Can you do repairs yourself?
• Can you live with somethings not working like power windows, power locks, air conditioning?
• What does the warranty cover?
• Where do you have to take the car for repairs?
• Is there a deductible?

These are some of the things to consider when thinking about the extended warranty.

BUY OR DON’T BUY: Maybe, but if you do buy it be sure to get the most coverage you can. I highly recommend reading the post I wrote about it.

Gap Insurance

This one is 100% case by case. Gap insurance covers the difference between what you finance on the car, and what the car is worth. Let’s say you buy a $20,000 car. If you finance all $20,000 you are immediately “upside down” with the car. That means you owe more than the car is worth. Remember your car depreciates the second you drive it off the lot. So now that car you just financed $20,000 on i worth $15,000.

What would happen if you totaled the car the next day? Your car insurance would cover the value of the car, but what about the other $5000. This is where gap insurance would be a smart choice. Also if you buy a car and roll negative equity from a trade in, gap insurance may be a good idea.

BUY OR DON’T BUY: If you buy a car smart with a big down payment, there is no need. If you will owe more than your car is worth, it could be a good move.

Key Replacement

This is actually new to me. This covers losing or damage to a vehicle key. While it is true that vehicle keys are VERY expensive, I don’t know about this one. Volkswagen keys run from $200-$300 to replace. That is not pocket change, but if we are smart and responsible with keys, there is no need for this.

BUY OR DON’T BUY: At this time I am saying do not buy. If I come across something that makes a good case for this, I will let you guys know. Until then don’t buy

Simoniz

Simoniz is the brand my dealer sells. There are other brands of detail products out there. Basically this is the “Scotch guard” and “Paint protection” packages. This type of thing is the typical snake oil in my opinion. Sure you could make a case for this being a good idea, but I am just not there. I think taking good care of your car and keeping it clean is important. I think that this may not be the best way.

BUY OR DON’T BUY: I don’t think that this is one I can recommend. The products may work, but again, this just seems like a snake oil type thing to me.

Security Coding

This is a system that codes the body panels of a car. We put little stickers on the doors and lids of a car. It is an anti-theft device. I am not going to spend any time on this. I do not see 1 benefit to this. Lock your car up, and if someone wants to steal it, they will. Do you really want a car back after it has been stolen? I don’t think that I would.

BUY OR DON’T BUY: Simple, do not buy! Done and done

There are most likely other add-ons that dealers off. Some are good and some are not worth your money. Remember, these are big time money makers for the dealers. Yes some of them are a great value, but if they didn’t make the dealer money, they probably would not offer them.

Well I hope that this post can help someone make a good choice about the extras that dealerships sell. If you know anyone in the market for a car, please share this post with them. In fact, this may be one of those posts that can really help a ton of folks from making a poor choice while under pressure from a finance manager.