Ally consumer survey shows volume of consumers faced with repair bill of at least $500
Experian Automotive previously reported that monthly payments for new-vehicle retail installment contracts originated during the first quarter reached a record high at $523. The monthly payment for a used model approached $400 with analysts pinpointing it at $372.
On Tuesday, Ally Financial released results of a poll that showed the depth of consumers who have encountered a vehicle repair bill similar to that figure — or even double or more than triple that monthly installment commitment.
Ally Financial based its survey on the premise that many American drivers who have to pay for unexpected, major car repairs could be at risk of facing costs they cannot afford.
According to a survey of more than 2,000 Americans conducted online for Ally Financial by The Harris Poll, 51 percent of consumers reported paying for major vehicle repairs in the last five years.
Of consumers who reported paying for repairs, four in five (80 percent) said they spent $500 or more, and nearly three in five (58 percent) said they spent $1,000 or more. One in three (33 percent) said they spent $2,000 or more.
Meanwhile, a 2018 Federal Reserve study found that when faced with an unexpected $400 emergency expense, 41 percent of adults either could not pay the expense, or would need to borrow money or sell something to cover it.
Ally Financial explained this means that a significant portion of drivers who are faced with unexpected repairs could not cover them out-of-pocket.
“Expensive car repairs can cause serious financial stress, especially for those with little or no emergency savings,” said Mark Manzo, president of Ally Insurance. “Most major vehicle repairs come unexpectedly, and standard insurance policies usually only cover repairs in case of accidents.
“The rise of complex vehicle technology and the increase in the number of used vehicles on the road have only made repairs more expensive and frequent,” Manzo continued.
As dealerships and finance companies certainly know, there is a solution that could help many consumers — vehicle service contracts — which can cover repairs that often are not covered by factory warranties or are no longer covered by expired warranties.
Only 18 percent of those surveyed reported buying a VSC in the last five years. Nearly three in five (59 percent) of those who had purchased VSCs said the peace of mind that comes from knowing repairs are covered was the top motivator for buying the coverage.
“Service contracts provide customers with the security of knowing they don’t have to worry about car repair bills derailing their budgets or putting them in debt,” Manzo said. “Payments for some VSCs can be rolled into regular auto payments, making it easier for consumers to budget and map out their expenses ahead of time.
“You can’t know when to expect the unexpected, but you can plan ahead by talking to your dealer about vehicle service contracts,” he went on to say.
Ally Premier Protection vehicle service contracts can cover more than 7,400 vehicle components and offer additional benefits including rental reimbursement, roadside assistance and reimbursement for trip interruption caused by a breakdown.
For more information, visit the Ally Premier Protection website.
The survey was conducted online within the United States by The Harris Poll on behalf of Ally from January 5-9 among 2,064 U.S. adults ages 18 and older.
“This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated,” officials said.