Consumer Talk 1: Difference between a motor warranty and a motor plan

realize that you are not covered for the repair. And we're going to be speaking in just a second to Erica Liedenberg from Just Money to explain the difference and what you should be looking out for. And then the second half of the hour, we're going to be talking about how a tech platform is helping South Africans to access their unclaimed benefits from, among others, the retirement industry.

Did you know there's more than ninety billion rand in unclaimed assets in the country, some of it could be yours. All right. Let's start though, with looking at the difference between a motor plan and a motor warranty and to make sure that you are choosing the right one when buying a car and in ensuring that you've got the right one, that you therefore have the right cover when those unforeseen car repairs hit. We've got to Erica Liebenberg from Just Money with Us, and that is a platform

that helps consumers make good money choices, which I'm here for. Erica, thanks very much indeed for joining us. Money is tight for an awful lot of South African households, and just the thought of suddenly being slapped with an unexpected car repair bill can make things very, very difficult for most of us. Give us an idea, you know, I mean, what's the range when it comes to what repairs could generally cost. I suppose it's how long is a piece of string?

those things are an issue. You know, if you have a look at labor rates at franchise dealerships, you're looking at anything between eight hundred to fifteen hundred grand per hour, So that's just for labor. And then parts are very often important. So if they're not after market parts, meaning you know, non genuine parts, if you like, not Toyota specific or manufactured by Toyota, you know, those are slightly cheaper,

but the genuine parts are often imported. And you know, certainly when your vehicle's at the beginning of its life, you want to be going to a registered franchise. You want to be using the right parts, you know, the genuine parts, because that all affects your vehicle resell value as well. Once your service plan runs out or once your vehicle gets a little bit older, people tend to start looking more towards those after market parts. Those are

a little bit cheaper. But to give you an indication, if you need to replace your brake pads on a mid rad you're looking at two thousand to three and a half thousand grand. A clutch replacement on a hatchback can cost you ten thousand grand. And then if you look at premium vehicles, you're looking at fifty thousand grand or more if a turbocharger or gearbox goes, and believe me when I tell you, they go and usually at the least convenient times, and generally when your maintenance plan

or your warranty has just run out. Most listeners would be able to relate to that.

plan or both. That's your motor plan, so a warranty and will break down what a service plan the maintenance plan are and what the differences are. But if we look at a motor warranty that's also called a factory or manufacturer warranty, and that's always automatically included with a new car because that's a requirement, and it usually lasts for a six period like three to five years, or up to a certain mileage like one hundred thousand or even

two hundred thousand kilometers. But it only covers unexpected mechanical or electrical failures in key components like your engine or gearbox, or if a part fails suddenly going to a manufacturing fault. What it doesn't cover is if a part wears out over time, and it doesn't cover your routine services. That's what your motor plan is for.

you at least x amount of time. If anything goes wrong within that time, that owes to a manufacturing fault, we stand by our product and will cover it for you. But if you slam the fridge door hard and the handle comes off in your hand, that is not going to be covered. That's wear and tear, and very similar with a motor plant. So if we break down what a motor plant is, that is a service plan. It can be comprised of one or both of these things. Either a service plan which covers the cost of your

routine services according to the manufacturer's schedule. So that would be you know, for example, your tenenty fifteen, twenty five, thousand, and so forth, services that are required. If you want your cart to stay in good working condition, and that includes laboring parts, then you might also, as part of your motor plan, have a maintenance plan, and that includes everything in a service plan, plus the replacement of parts that wear and tear over time, or we're out over time,

like brake pads, the clutch, the battery. It will also cover mechanical and electrical failure, so you know, in that respect you would probably find a little bit of overlap between a motor warranty and a maintenance plan. But again, the warranty will not cover you for anything related to wear and tear. That's where your maintenance plan kicks in.

a motor warranty. When you buy a car, I wonder, then what options might one have, Erica, when the cover expires, what other options are there for you to kind of offset the costs of repairing your cart, Because for some people, they're never going to be in a position they might be able to afford a monthly premium, but they might not be in a position to be able to afford fifty thousand round for a you know, to redo their gears or whatever.

maintenance plan or bor if those are offered. So if you buy an extended warranty, this will cover the same things or most of the same things as an original warranty, some mechanical and electrical failures, but it's very very important to check what's included in that. And then your extended service or maintenance plan. Again, that would cover your routine servicing if it's a service plan, or your wear and

tear items if it's a maintenance plan. And you can buy those extended service and maintenance plans for specific time frames or mileage limits. And again it varies widely in terms of what they cover, so it's absolutely crucial before you part with money, which can be between fifteen to thirty thousand grand, you know that you check what is included in those extended plans. The other option that you've got, and it's the one that you noted, and I think

very few people are in that position. As you also noted, is to pay out of pocket, so that would give you probably the most flexibility, but it leaves you hugely exposed to sudden and potentially very large expenses. The other idea is to actually have a dedicated savings account set aside, so you literally put a certain amount of money each month into that savings account to cover your future car costs.

We call this self insurance in a sense. But it's important that if you're going to take that option that you understand you may still have a shortfall. It could still be substantial depending on what you're sitting aside, and it's crucial to put your money in a high interest bearing account. It's got to at least keep up with inflation rates, otherwise your money is just going to not be of the same value over time. And then the final option, which I think is quite a good one.

It's probably amongst the most viable options for most of us, is to trade in or sell your car while it still has a decent resell value. So once your car looks like it's going to start incurring high repair costs, it's worth looking at selling it. You might have your

own limit. In our family, we tend to get rid of cars when once they start hovering around the two hundred thousand kilometer mark, because if at that point they're still running nicely, there haven't been any major repair expenses, we can sell them in good conscience and you know, still get a reasonable value and put that value towards a newer vehicle that's covered by a warranty or service and maintenance plan. So that's your that's your fifth option.

And you know, really choosing between those options depends on you know, your driving habits, your car's age, and your financial situation. Those are all the things that you need to take into account.

for myself it's really worth it. But it comes down to whether you clock up high mileage or you drive in tough conditions. Under either of those circumstances, the likelihood that you're going to face a really expensive repair bill are high. They're really quite high. So you know, either high mileage which all tough conditions, or both are where a service or maintenance plan can really help you to budget more predictably and help you upset what I personally

would consider too hire a risk to take. If your car is, you know, relatively new, you've run out of service plan or you've run out of you know, warranty because it's a it's an older vehicle, but you're not driving it very much. Your driving habits tend to be moderate. You are not driving rough roads, you're not driving much. Your car lives in your garage most of your time. You know, zing you could possibly look atself ensuring, you know, setting aside that money to say, Okay, if something does

go wrong, it's pretty unlikely. I'm getting my services done. You know, they're not picking up anything disastrous. My car is still only got you know, I want to say fifty thousand on the clock. The chances of something going catastrophically wrong are pretty limited. I'm not going to worry about paying for an extended warranty or motor plan. You know, that would be the option I would go for under

those conditions. And you know, whichever option you go for, if absolutely crucial to read the fine print, because what your original warranty covered may not be the same as what your extended warranty might cover, and the same with a motorplane. You've got to got to read that fine print. There is nothing worse, and I think most of us can relate to this then, you know, putting forward a large sum of cash only to find out that the one thing that goes wrong with your vehicle is the

one thing that it doesn't cover. What are the.

very difficult. If you've got a good supplier and you know they're giving you a full breakdown of what's gone wrong with your vehicle, and they're honest with you, they are going to make sure that whatever they can to the full extent possible, they will push it through under your warranty, but you can't be you know, that is not a guarantee. There are so many things, and of course some of the time it's really hard to say whether something was actually a manufacturing fault or whether it

was war and fear over time. And I think you know that's something that applies not just to cars, but also to electrical appliances. There can be a hidden fault that is virtually undetectable unless there's a product recall. You never found out and you end up having to pay the cash yourself to get something six it was actually a manufacturing fault, but neither you nor the service technician are the wiser to that. So the warranty is really

really so limited in that respect. So to me, you know, a motor plan can mitigate that risk to and extinct insofar as if it is wear and tear and it is something that is subject frequently to warrantear like breaks, they pads, clutch battery, earboxes, you know, those sorts of things, then you are going to be covered for those kinds of things. The other thing to bear in mind with this conversation is that if you are in an accident and something breaks, that's not wear and tear, and that's

not warranty, you know, specific or applicable. That is a different issue again, and that is where your car insurance comes in. And the only thing that's going to cover you for, supposing that you've got fully comprehensive insurance, is that accidental damage, their fire and third party planes. None of those things are going to be covered by your warranty. So you could be real or motor plans, so you

could be really unlucky. Let's say, and you've got something that is wrong with your vehicle inherently already and it's kind of about to fall off or about to go haywire, or whatever the case may be. Then you get in an awful accident. Let's say somebody bumps into you from behind and that item gets damage. You're never going to be able to show that that wasn't a result of the damage, and that's where your insurance was kicking. So that's another important thing to take in mind.

flatbit to get it there. And this was a distance from my house of less than five hundred meters, so the costs can really really escalate.