You start thinking about the time, money and irritation it has cost you and, yes, it does seem at first that a new car would solve all those problems. But, have you done the maths properly?
Let’s have a quick look at the cost analysis between keeping your old car and buying a new one. Say you own a 2009 VW Polo Vivo and the head gasket is blown. You’re looking at a repair bill of up to R20 000 depending on where you take it. The trade value of your Polo is only R50 000. So your repair cost is 40% of the value of the car. Now that’s enough to make anyone run to the nearest new car showroom.
But let’s not be too hasty in our decision. Spread over the course of a year, that repair would cost you in the region of R1 666 per month, but the instalments on a new Polo would be about R3 400 a month. Even if you add R1 000 a month running costs to your old vehicle, you will still be saving more than R700 a month.
So what should you do? Well you could protect yourself from the hefty repair bill by investing in a Motor Warranty. “Don’t they only come with new cars?”, I hear you ask. No, even your old car can be covered. Think of it as Medical Aid for your car, only cheaper. Some companies are advertising cover from as little as R6 a day.
There are many companies out there offering to protect your pride and joy and they cover a number of things such as air conditioners, the engine, suspension, steering and the turbo. Some even provide rental vehicles and accommodation should you be stranded out of town.
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So how do Motor Warranties work and when should you buy one? When is simple – as soon as your manufacturer warranty expires. Especially if you are planning to keep the car for any extended time. How they work is typically based on the age of the car and the amount of recorded mileage. This will usually dictate the level of cover. A newer car with less mileage will get a higher monetary amount allocated to repair than an older one.
What components are covered and for how much is the most important factor when choosing a Motor Warranty. There are price plans that allow for a once-off payment or even monthly instalments. Also worth considering is whether the policy requires you to pay for the repairs yourself then claim back the cost from the warranty provider. In our view you should not pay for the repairs first as we feel that you have already paid to have the cover – why should you have to pay again?
So, how do you choose a warranty provider? Well, you could search the web and ask for quotes from all the warranty vendors out there or you could use a comparison website like www.hippo.co.za who will instantly get quotes directly from various providers’ databases, and display them side by side. The website also offers quotes across various financial products such as Car Insurance, Home Insurance, Life Insurance, Medical Aid and more.
Given the state of the South African economy, hanging on to your old car, together with a decent Motor Warranty, makes good financial sense.
Written in collaboration with: Hippo.co.za
