JOHANNESBURG, South Africa – Do you know the difference between a service plan and a maintenance plan? What about a factory warranty, or perhaps an extended factory warranty?
The South African Automobile Association tells The Corner that many car-owners – particularly first-time buyers, find such options confusing – even stressful.
”Many,” the AA adds, ”also don’t know their rights or even if such products are optional or mandatory.”
David Chard, managing director of of AA Warranties, explained: “Vehicle buyers should understand what they’re getting into and realise all the costs for which they are signing.
”Knowledge of add-on plans is as important as ensuring the vehicle meets all their needs.”
TELL THE DIFFERENCE – SERVICE OR MAINTENANCE?
First, he suggests, understand that such plans are intended for limited periods, even though they might be intended or a new vehicle. ”They will remain ‘active’ until a certain vehicle kilometres reading appears or until the vehicle reaches a certain age – for example, three years.
”This information is specified at the point of sale when the vehicle is purchased.”
A service plan covers the costs of regular scheduled services determined by the manufacturer. Items covered under a such a plan will be marked by an “R” (for replacement) at service intervals. Buyers must check with the dealer or consult the vehicle’s handbook to find out when these intervals will occur.
”Importantly,” Chard point out, ”a service plan does not cover wear and tear on a vehicle, nor does it cover mechanical breakdown. It’s a sort of budgeting tool for the vehicle’s owner.
“It can be bought upfront as a term product or as a monthly payment. Either way, it covers the prescribed services for a specific duration of time or kilometres, with the premium paid to cover the costs of a service when needed.”
A maintenance plan is more expensive but also more comprehensive. It will cover all routine servicing (according to the manufacturer’s schedule), mechanical failures, and wear-and-tear.
Many maintenance plans are included in manufacturer’s new-vehicle sales but can also be bought separately. They can also, at extra cost, be extended.
A mechanical warranty differs from both the above… It will cover mechanical failures or breakdown of parts, but will typically not cover scheduled services or wear-and-tear. They cover the risk of parts failing and, as with the products above, are often included by the manufacturer on new cars.
They also can be extended or replaced with an equivalent once their initial term has expired.
WHAT RESEARCH SAYS…
Chard also explains that such extension or replacement products applied when the original one expires for two reasons.
First, research shows that in tough economic times car owners keep their vehicles longer – perhaps seven or more years – which means caring for the vehicle becomes even more important.
Second, more and more pre-owned vehicles are being bought instead of new – but their buyers still require peace-of-mind after manufacturers’ service and maintenance plans have expired.
AVOID THE VEHICLE REPAIR DEBT-TRAP
Chard again: ”Changing vehicles just to have the peace-of-mind of a manufacturer’s new-vehicle warranty or motorplan can not only be expensive but also have the potential to drive buyers into debt.
”Also, with the right products, it is potentially unnecessary.”
But hold on: that doesn’t mean the buyer should not bother with cover…
“Keeping an older used car without a service plan, maintenance plan, or at least a warranty exposes the owner to potentially crippling maintenance and repair costs,” Chard says.
”It could be a nasty financial surprise. We’ve heard of people having to come up with thousands of rands to get their vehicle back on the road. One doesn’t want unnecessary products – but one also doesn’t want to be stranded.
“An extended warranty offers a lifeline when needed most and makes the vehicle operational again far quicker.
”’Another benefit is that some warranties are available as ‘pay-as-you-go’ – a monthly subscription… it’s a very attractive option.”