Buying a Warranty for a Used Car: Top Considerations
Is your company planning on buying used cars? Then you might want to invest in an extended vehicle service contract, which can provide many benefits to you and your customers. There are several factors you need to consider before making the final purchase. Here are the top considerations when buying an extended service contract for used cars.
What Will Be Included?
The biggest factor your company needs to consider when buying an extended vehicle service contract is what will be included. There are several plans provided by extended vehicle service contract companies that cover different components of a used vehicle. An examination of your customer’s needs and what they are willing to spend help determine what level of coverage you will include in your contract. In general, there are four types of coverage to consider.
Powertrain offers basic coverage, protecting used cars most important and expensive parts only, like the engine, drive axle, transmission, etc. A stated component plan offers protection to the powertrain and other parts, like heating and cooling systems, brake systems, water pump, and so on.
An exclusionary plan, popularly referred to as a “bumper to bumper” plan, offers extensive coverage, to the point that instead of listing what is covered, there is only a list of what is not covered. Some used cars still have some of the manufacturer’s plan, which includes some of the car’s parts. A wrap plan will cover the rest of the used car.
What Kind of Savings Will Be Offered?
The next thing your company needs to consider when buying a used car extended service contract is how much savings will be offered. The best-extended vehicle service contract companies are willing to include thousands of dollars of savings in the contract because to do otherwise would mean losing customers. The exact amount of savings depends on how often a customer will use the policy during coverage. This has various dimensions, and you want to make sure your service plan will benefit customers rather than costing them in the end.
How Much Will Your Plan Cost?
Once your company has decided what type of coverage to offer and how much savings will be provided, your next step is to figure out how much the plan will cost. As an extended vehicle contract administrator, you need to understand what your customers can afford on average. This will guide you toward creating a plan that will be profitable to your used car company and being affordable to a majority of customers. You may also want to offer a few payment plan options for customers who might be on the lower end financially. Discuss these options with a vehicle service contract provider to fine-tune the cost of the extended plan your company wants to invest in.
If you would like to know more about what to consider when buying an extended service plan for used cars, contact Freedom Warranty LLC by email at contactus@freedomwarranty.com.
