Let’s face it, whenever you decide to purchase a new or pre-owned vehicle the last thing on your mind are repair costs. Your primary concern is "how much is my new or pre-owned car, truck or van going to cost me each month?" It’s a new vehicle, so why would I have repair costs? So, as an auto buyer you decide not to get warranty protection on your car, truck, van or SUV to stay within your monthly budget.

Well, consider this fact. The standard warranty on most new and pre-owned vehicles is 3 years or 36,000 miles (whichever comes first) and the average auto loan term is 66 months.

Those unexpected out of pocket repairs can cause undue stress to your checkbook and budget. By adding warranty protection to your monthly auto payment you can protect yourself from making monthly payments on a non-functioning or improperly functioning vehicle because you cannot afford to make repairs. Getting less than fair market value for your trade-in because your vehicle is non-functioning or improperly functioning. Getting behind on your monthly auto payments because of unexpected repair costs. Carrying over negative trade equity (being-upside down) to your next vehicle loan.

If your vehicle is worth less than the loan amount, you will have to add this amount to your next vehicle loan. What does this mean to you? Well consider this example.

Tim purchases a new Cavalier© in January of 2002 and decides against purchasing the warranty protection. In June 2005 Tim’s engine failed and the repair estimate came to $3,350.00 because he had over 41,000 miles on the Cavalier© and he was over the 3 year 36,000 mile standard warranty. Tim didn’t have the money so; he decided to trade it in as-is at the dealership where he originally purchased it for a brand new Chevy Cobalt©.

Kelly Blue Book shows that Tim’s Cavalier© is worth $5,425.00 in "Good" condition. However, because of the blown engine, Tim’s trade-in is worth only $2,075.00 because of the necessary engine repairs. Tim’s payoff amount for his existing loan on the Cavalier is $5,625.00.

The difference between what Tim’s Cavalier© is worth and how much he owes on his existing loan is $3,550.00. Tim will now have to add this amount to the loan for his new Cobalt©. This is what is referred to as "being upside down" or having "negative trade equity". Having warranty protection on the original loan could have saved Tim over $3,000 and prevented him from paying additional repair costs and adding additional cost to his new Chevy Cobalt© loan. Tim could be paying for this mistake for years to come because more time is needed to pay the negative equity that was added to his new Cobalt© loan.

Warranty protection plans can be added to your monthly note for less than $30.00 a month.