In a classic scene from the Oscar-winning film Fargo, car salesman Jerry Lundegaard infuriates two older customers by insisting they pay for something called Truecoat. Despite their protests, the salesman claims the protectant is applied at the factory and the best he can do is to knock $100 off the cost. In frustration, the couple finally relent just to get the ordeal over with.
It’s a scene all too familiar to anyone who’s crossed swords with a car salesperson or squirmed uncomfortably in a dealership’s business office. Rustproofing, extended warranty, paint protection and fabric guard—the list of last-minute options thrust before buyers seems endless, and consumer experts say the payoff for the seller can be huge. “The dealer always tries to option-load vehicles because that’s where the real money is made,” says Phil Edmonston, author of the Lemon-Aid series of car-buying guides.
MoneySense set out to separate the deals from the duds with the help of Edmonston and George Iny, president of the Automobile Protection Association. We’ve listed the most popular dealer add-ons below, with our take on their real value.
Dealer-applied treatments cost $500 to $800 and claim protection from 10 years to life. Some dealers require annual inspections with potential touch-up treatments at the owner’s expense. The dealer’s cost is only about $150, and our experts say the written guarantees have loopholes large enough to drive your vehicle through. “Dealer-applied rustproofing is of very uneven quality and frequently overpriced,” says Iny. Edmonston also notes that regular washing and factory rustproofing will usually keep your car intact for up to seven years without any additional product.
The verdict: If you tend to switch vehicles every five to seven years, additional rustproofing probably isn’t necessary. But if you drive your cars into the ground, your best bet is an annual application of rustproofing at an independent chain like Rust Check or Krown.
All carmakers offer comprehensive warranties of three to five years, but dealers will often try to sell you more. Depending on the coverage and length of term, extended warranties run anywhere from $750 to $2,000. Edmonston says this is the biggest money maker for dealers, with profit margins of up to 50%, and salespeople pocketing a 10% commission just for getting you to sign on.
The verdict: Iny says extended warranties only make sense if you’re purchasing a new luxury vehicle or SUV with below-average predicted reliability or high servicing costs. But even then, he cautions buyers to be sure they are purchasing additional protection from a factory-backed warranty and not a third-party product that covers fewer components and may not be honoured at other dealerships. Edmonston’s advice on warranties is more to the point: “You shouldn’t buy a car that requires an extra warranty in the first place.”
Paint and fabric protection
These packages promise gleaming paint and unblemished interiors for years, with costs running into the hundreds of dollars. Fabric is typically treated with spray-on chemicals, and a clear-coat product is layered on top of the factory paint.
The verdict: Edmonston says both are real money wasters and just another high profit item for the dealers. “If the paint on your car doesn’t last up to seven years, your best protection is small claims court.” Iny agrees and suggests that if you really want the extra protection, auto detailing shops offer similar paint protection for a lot less, while a $10 can of Scotchgard will fend off those juice box stains.
Like the Truecoat of Fargo fame, some dealers insist that window etching is automatically installed on all vehicles prior to sale and part of the normal package. Iny calls this technique “tied selling,” which is illegal. The etching itself is an acid treatment that burns a car’s unique Vehicle Identification Number on to all the windows, in theory making the car less desirable to thieves. A warranty providing additional insurance money in the event of theft is included in the price. Iny says the etching and warranty cost the dealer about $50, yet they charge the consumer $200 to $250. Do-it-yourself etching products cost about $30.
The verdict: The Insurance Bureau of Canada says window etching can deter some thieves, but it seldom dissuades organized gangs looking to ship your vehicle overseas.