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Question DetailsAsked on 5/3/2012

Are the new-car extras, such as paint protection, underbody coating, and loan gap insurance worth it?

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Voted Best Answer

Hi, i worked in the automoble field for 8 years, I was the CIO of a large 8 location dealer group.

Frankly, i would be leary of doing business with a company that is still pushing paint protectant or undercoating. Undercoating is BIG no no as it will actually cause rust. It traps water between the steel and the undercoating causing corrosion, it plugs up the door and rocker panel drains as well as drain holes in the uni-body frame rails. The dealers cost for the undercoating is about 250.00 including man hours, it is a huge profit booster and nothing more. Although Paint Protectant will cause no damage, it does no good. It is nothing more than an acrylic polymer protectant which can be purchased at an automotive store...cost for the dealer including man hours, 75-100 dollars. It is nothing more than a profit booster.

Gap insurance is worth it, if you are involved in a collision and your car is a total loss, the insurance company generally pays you the trade value for the car. Gap insurance will pay the difference between what the insurance pays you and how much you owe on the car. for instance, if the insurance company pays you 2k dollars and you owe 3k, the gap insurance will pay the difference of 1k. However, if you are finanacing 75 percent of the vehicle cost, then gap is not needed.

Here is my best advice, pay for the car and not a single additional item. Pay no more than 10 percent over cost, ask to see the dealer invoice, add 10 percent and pay that price. Gap insurance can be purchased through the finance company after the purchase.

So, if the invoice states the car cost the dealer 20k, you offer 22k and not a dime more as that is a fair profit for the dealer. Puschase no other add ons, none. If they wont show you the invoice, there are plenty of honest dealers that will. I would be very careful with this dealer.

Dealers also make money on financing. for instance, they submit your loan for approval, the bank comes back and approves the loan at 6 percent interest. The dealer will add 2 or 3 points charging 8-9 percent interest and the dealer gets the money for the points at the time of sale. Ask them how may points they are adding to the bank rate.

I summary, be careful. dont fall in love as there are many dealers with the same car. Offer 10 percent over the dealer invoice and purchase nothing else. if the dealer gets defensive, fails to show you the invoice, or pulls other sneaky tactics...WALK. go to another dealer.

I strongly recommend visiting visit to find the dealer cost for your car as well as many other informative car buying tips.

Answered 8 years ago by Kevins Small Engine

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