What cuts are you making to reduce your outgoings during the so-called ‘credit crunch?’ Getting rid of the family taxi doesn’t seem to be one of them according to a recent report. Although at MTI we never complain of new punters strolling onto our forecourts or the continuous flow of customers swarming into the service departments, extending the warranty on your faithful friend has dramatically increased.Warranty Direct, the leading direct consumer warranty provider, has seen a 28 percent increase in demand for its mechanical breakdown insurance on four-year-old vehicles since the end of April.
According to a recent YouGov poll, at least 1 in 2 drivers admit they will hold on to their cars longer than planned due to the increased strain on household expenses. Speaking to an array of car owners recently, most admit that it has become more viable to keep their old car than traditionally chopping it in every three years.
“I can’t afford to keep changing my car like I use to. I’ve had more cars than wife’s over the last twenty years, but like my current marriage, I can’t change it now!”, one owner joked.
If you compare the running costs against a one-year-old car to a four-year-old equivalent, you could save thousands. A Ford Focus 1.6 can depreciate as much as £6,800 over 12 months, compared to £2,500 for the same four-year-old car. Add in the annual MOT and service costs plus an extended warranty package, and the savings can be as high as £1800 per year.
Warranty Direct MD, Duncan McClure Fisher said recently, “In today’s economic climate, it’s the only sensible thing to do.”
Although this could help your outgoings, most used car warranty policies still don’t cover general wear and tear items, and, reading through the small print can reveal even more hidden gems. A large proportion will have you over a barrel when it comes to maximum claim limits. Most mirror a Limbo dancer when it comes to paying for that all important repair bill. I’ve seen plenty of policies with a £350-£500 cap and invoices worryingly higher. It’s all fair and well thinking you’ve got a “get-out-of-jail-card” in the glove box, but as we all know with older cars;
A.) the part that happens to need replacing is bound to cost upwards of your claim limit
B.) the chances of more than one claim per year is going to be as regular as a new James Bond film.
This means that yet again we have to dig deep into our pockets and contribute to our supposed warranty policy. If I had a pound for every claim I’ve seen where the customer has been out of pocket, I could retire happily in the Seychelles. Some say that their agreement has been used as toilet paper and that they won’t be renewing any time soon.
This makes a used car warranty a wasted investment for some especially for those with older cars. But with times getting tough, it just may save the bacon and get you out of a difficult situation, even if you have to contribute. An MTI top tip is an obvious one but essential nevertheless; read the small print and make sure you know where you stand before parting with your cash.