Use these 5 questions to help your members decide if they should keep their current vehicles.
By Tom Kazar
Sponsored by Transamerica
This week a friend of mine took his car into the shop and was told that his auto repair bill would be almost $2,000. He came to me and asked, “I love my car, but repairs are getting expensive. Should I keep repairing or cut my losses and purchase a new car?” So we began spreadsheeting and working the math to see what made more “cents.” Your members’ best interest is important, so here are some questions to ask your members to help them reveal the financial pluses and minuses before they give up on their current car and purchase something new (or new to them):
- Do you currently have liability or full coverage auto insurance? If the car is older, insurance premiums may be lower because the cost of replacing the car is less. If your member will be financing his next vehicle, he will need full coverage and may be paying more. Have him get a quote from his insurance company so he can gauge the price difference.
- How will gas consumption change? With gas prices as high as they are, a few miles per gallon difference can have a strong impact on a weekly budget. Have your member calculate her current mileage and research the mileage of vehicles being considered. A weekly surplus or deficit can save or cost a lot over the vehicle’s lifetime.
- Do you have any warranties that may be valuable? Maybe your member has a warranty on tires or other parts that would be nontransferable and could come in handy. Or maybe your member purchased a vehicle service contract, which covers some repairs. Have your member find the paperwork and figure out what is covered.
- How much are maintenance and repairs costing? Even a new vehicle has maintenance and repair costs, so purchasing a new(er) vehicle does not leave your member free and clear of auto shop charges. A few hundred dollars each quarter is far less than most new(er) vehicle payment plans. However, expensive repairs bring about additional questions: How much life will the repair add to the vehicle? and How long will repairs take and leave you without a vehicle?
- Are you disciplined enough to save up for big-ticket repairs or would a vehicle service contract help? There can be a benefit to purchasing risk protection to help offset some of the future repair costs. The cost of a vehicle service contract, such as RoadSecure® by Transamerica, may pay for itself quickly if needed repairs are covered. RoadSecure may also be something your members would want to add to the new(er) vehicle loan if they decide to purchase something else, to avoid expensive coverable repairs in the future.
By asking these questions, you may be able to help your members calculate the best bang for their automotive buck. But no matter how the math adds up, your members need to do what’s best for them, their family, and their budget.
Tom Kazar is VP/sales and leader of the sales team for Transamerica – Financial Solutions Group, a CUES Supplier member based in Plano, Texas. Reach him at 630.215.6042. Read previous CUES Skybox posts by Transamerica: "Creative Training Solution for Customer-Centric CUs" and "Connecting With Future Borrowers." Photocredit: dollarphotoclub.com/carballo
