Speaker 1: Now, as I mentioned at the top of the hour,
Speaker 1: for consumer Talk today with things doing things a little
Speaker 1: bit differently since Wendy isn't available today, So for this
Speaker 1: first conversation taking us to the headlines with Zulfa, we're
Speaker 1: going to be looking at the difference between motor plans
Speaker 1: and motor warranties and the problem with them is that
Speaker 1: you often find out the difference between the two only
Speaker 1: when something has gone wrong with your car and you
Speaker 1: realize that you are not covered for the repair. And
Speaker 1: we're going to be speaking in just a second to
Speaker 1: Erica Liedenberg from Just Money to explain the difference and
Speaker 1: what you should be looking out for. And then the
Speaker 1: second half of the hour, we're going to be talking
Speaker 1: about how a tech platform is helping South Africans to
Speaker 1: access their unclaimed benefits from, among others, the retirement industry.
Speaker 1: Did you know there's more than ninety billion rand in
Speaker 1: unclaimed assets in the country, some of it could be yours.
Speaker 1: All right. Let's start though, with looking at the difference
Speaker 1: between a motor plan and a motor warranty and to
Speaker 1: make sure that you are choosing the right one when
Speaker 1: buying a car and in ensuring that you've got the
Speaker 1: right one, that you therefore have the right cover when
Speaker 1: those unforeseen car repairs hit. We've got to Erica Liebenberg
Speaker 1: from Just Money with Us, and that is a platform
Speaker 1: that helps consumers make good money choices, which I'm here for. Erica,
Speaker 1: thanks very much indeed for joining us. Money is tight
Speaker 1: for an awful lot of South African households, and just
Speaker 1: the thought of suddenly being slapped with an unexpected car
Speaker 1: repair bill can make things very, very difficult for most
Speaker 1: of us. Give us an idea, you know, I mean,
Speaker 1: what's the range when it comes to what repairs could
Speaker 1: generally cost. I suppose it's how long is a piece
Speaker 1: of string?
Speaker 2: It is to an extent, Sarah Jane. But you know,
Speaker 2: we've sort of got some starting points that we can consider.
Speaker 2: So you know, of the twelve million self propelled vehicles
Speaker 2: that are registered in South Africa as of November last year,
Speaker 2: most of them are cars and station wagons. So it
Speaker 2: just gives you an indication of how many cars are
Speaker 2: actually on the road and for each of those vehicles,
Speaker 2: you know, obviously maintenance where and tear services, all of
Speaker 2: those things are an issue. You know, if you have
Speaker 2: a look at labor rates at franchise dealerships, you're looking
Speaker 2: at anything between eight hundred to fifteen hundred grand per hour,
Speaker 2: So that's just for labor. And then parts are very
Speaker 2: often important. So if they're not after market parts, meaning
Speaker 2: you know, non genuine parts, if you like, not Toyota
Speaker 2: specific or manufactured by Toyota, you know, those are slightly cheaper,
Speaker 2: but the genuine parts are often imported. And you know,
Speaker 2: certainly when your vehicle's at the beginning of its life,
Speaker 2: you want to be going to a registered franchise. You
Speaker 2: want to be using the right parts, you know, the
Speaker 2: genuine parts, because that all affects your vehicle resell value
Speaker 2: as well. Once your service plan runs out or once
Speaker 2: your vehicle gets a little bit older, people tend to
Speaker 2: start looking more towards those after market parts. Those are
Speaker 2: a little bit cheaper. But to give you an indication,
Speaker 2: if you need to replace your brake pads on a
Speaker 2: mid rad you're looking at two thousand to three and
Speaker 2: a half thousand grand. A clutch replacement on a hatchback
Speaker 2: can cost you ten thousand grand. And then if you
Speaker 2: look at premium vehicles, you're looking at fifty thousand grand
Speaker 2: or more if a turbocharger or gearbox goes, and believe
Speaker 2: me when I tell you, they go and usually at
Speaker 2: the least convenient times, and generally when your maintenance plan
Speaker 2: or your warranty has just run out. Most listeners would
Speaker 2: be able to relate to that.
Speaker 1: So let's talk through those two things that Normally when
Speaker 1: you buy a car, the dealership tries to sell you
Speaker 1: a motor plan or a warranty, and these terms are
Speaker 1: often used interchangeably. But they're not the same thing, are
Speaker 1: they What is the difference?
Speaker 2: No, absolutely not the same thing at all, Sarah Jane,
Speaker 2: and crucial to know what the difference is. It's important
Speaker 2: to note as well, many new cars do come with
Speaker 2: both a motor plan and warranty bundle together, and then
Speaker 2: it becomes even more confusing as you know in general
Speaker 2: that you're covered. But a motor plan basically helps you
Speaker 2: manage the cost of keeping your car in good running condition,
Speaker 2: meaning it may include a service plan and a maintenance
Speaker 2: plan or both. That's your motor plan, so a warranty
Speaker 2: and will break down what a service plan the maintenance plan
Speaker 2: are and what the differences are. But if we look
Speaker 2: at a motor warranty that's also called a factory or
Speaker 2: manufacturer warranty, and that's always automatically included with a new
Speaker 2: car because that's a requirement, and it usually lasts for
Speaker 2: a six period like three to five years, or up
Speaker 2: to a certain mileage like one hundred thousand or even
Speaker 2: two hundred thousand kilometers. But it only covers unexpected mechanical
Speaker 2: or electrical failures in key components like your engine or gearbox,
Speaker 2: or if a part fails suddenly going to a manufacturing fault.
Speaker 2: What it doesn't cover is if a part wears out
Speaker 2: over time, and it doesn't cover your routine services. That's
Speaker 2: what your motor plan is for.
Speaker 1: It's it's a guarantee of the of the the quality
Speaker 1: of the car essentially in the you know, it's not
Speaker 1: wear and tear. If you drive you know, this car,
Speaker 1: then then obviously there's going to be where in tear.
Speaker 1: But it's it's a it's a guarantee of this is
Speaker 1: we we put our name on this for X number
Speaker 1: of years.
Speaker 2: Absolutely, it's that in a very similar way to buying
Speaker 2: a large electrical appliance. Yeah, you know, if you buy
Speaker 2: a you know, a reputable brand dishwasher or you know,
Speaker 2: fridge for example, that will come with a warranty. And
Speaker 2: again as exactly as you say, that's the stamp of
Speaker 2: quality from the manufacturer to say, you know, we certify
Speaker 2: that we know that this product is going to last
Speaker 2: you at least x amount of time. If anything goes
Speaker 2: wrong within that time, that owes to a manufacturing fault,
Speaker 2: we stand by our product and will cover it for you.
Speaker 2: But if you slam the fridge door hard and the
Speaker 2: handle comes off in your hand, that is not going
Speaker 2: to be covered. That's wear and tear, and very similar
Speaker 2: with a motor plant. So if we break down what
Speaker 2: a motor plant is, that is a service plan. It
Speaker 2: can be comprised of one or both of these things.
Speaker 2: Either a service plan which covers the cost of your
Speaker 2: routine services according to the manufacturer's schedule. So that would
Speaker 2: be you know, for example, your tenenty fifteen, twenty five, thousand,
Speaker 2: and so forth, services that are required. If you want
Speaker 2: your cart to stay in good working condition, and that
Speaker 2: includes laboring parts, then you might also, as part of
Speaker 2: your motor plan, have a maintenance plan, and that includes
Speaker 2: everything in a service plan, plus the replacement of parts
Speaker 2: that wear and tear over time, or we're out over time,
Speaker 2: like brake pads, the clutch, the battery. It will also
Speaker 2: cover mechanical and electrical failure, so you know, in that
Speaker 2: respect you would probably find a little bit of overlap
Speaker 2: between a motor warranty and a maintenance plan. But again,
Speaker 2: the warranty will not cover you for anything related to
Speaker 2: wear and tear. That's where your maintenance plan kicks in.
Speaker 1: If you're just joining us this afternoon, it is consumer talk,
Speaker 1: no Wendy this afternoon though. Instead we're looking at a
Speaker 1: couple of issues that we thought you might like to
Speaker 1: be aware of. The First one, we have asked Erica
Speaker 1: Liebenberg from Just Money to drop by and help us
Speaker 1: out to understand the difference between a motor plan and
Speaker 1: a motor warranty. When you buy a car, I wonder,
Speaker 1: then what options might one have, Erica, when the cover expires,
Speaker 1: what other options are there for you to kind of
Speaker 1: offset the costs of repairing your cart, Because for some people,
Speaker 1: they're never going to be in a position they might
Speaker 1: be able to afford a monthly premium, but they might
Speaker 1: not be in a position to be able to afford
Speaker 1: fifty thousand round for a you know, to redo their
Speaker 1: gears or whatever.
Speaker 2: No, absolutely, there are quite a few options available, thankfully,
Speaker 2: because I think very very few of us are in
Speaker 2: the fortunate position of being able to cover such high
Speaker 2: repair cost. The first would be if it's available to
Speaker 2: buy an extended warranty or buy an extended service or
Speaker 2: maintenance plan or bor if those are offered. So if
Speaker 2: you buy an extended warranty, this will cover the same
Speaker 2: things or most of the same things as an original warranty,
Speaker 2: some mechanical and electrical failures, but it's very very important
Speaker 2: to check what's included in that. And then your extended
Speaker 2: service or maintenance plan. Again, that would cover your routine
Speaker 2: servicing if it's a service plan, or your wear and
Speaker 2: tear items if it's a maintenance plan. And you can
Speaker 2: buy those extended service and maintenance plans for specific time
Speaker 2: frames or mileage limits. And again it varies widely in
Speaker 2: terms of what they cover, so it's absolutely crucial before
Speaker 2: you part with money, which can be between fifteen to
Speaker 2: thirty thousand grand, you know that you check what is
Speaker 2: included in those extended plans. The other option that you've got,
Speaker 2: and it's the one that you noted, and I think
Speaker 2: very few people are in that position. As you also noted,
Speaker 2: is to pay out of pocket, so that would give
Speaker 2: you probably the most flexibility, but it leaves you hugely
Speaker 2: exposed to sudden and potentially very large expenses. The other
Speaker 2: idea is to actually have a dedicated savings account set aside,
Speaker 2: so you literally put a certain amount of money each
Speaker 2: month into that savings account to cover your future car costs.
Speaker 2: We call this self insurance in a sense. But it's
Speaker 2: important that if you're going to take that option that
Speaker 2: you understand you may still have a shortfall. It could
Speaker 2: still be substantial depending on what you're sitting aside, and
Speaker 2: it's crucial to put your money in a high interest
Speaker 2: bearing account. It's got to at least keep up with
Speaker 2: inflation rates, otherwise your money is just going to not
Speaker 2: be of the same value over time. And then the
Speaker 2: final option, which I think is quite a good one.
Speaker 2: It's probably amongst the most viable options for most of us,
Speaker 2: is to trade in or sell your car while it
Speaker 2: still has a decent resell value. So once your car
Speaker 2: looks like it's going to start incurring high repair costs,
Speaker 2: it's worth looking at selling it. You might have your
Speaker 2: own limit. In our family, we tend to get rid
Speaker 2: of cars when once they start hovering around the two
Speaker 2: hundred thousand kilometer mark, because if at that point they're
Speaker 2: still running nicely, there haven't been any major repair expenses,
Speaker 2: we can sell them in good conscience and you know,
Speaker 2: still get a reasonable value and put that value towards
Speaker 2: a newer vehicle that's covered by a warranty or service
Speaker 2: and maintenance plan. So that's your that's your fifth option.
Speaker 2: And you know, really choosing between those options depends on
Speaker 2: you know, your driving habits, your car's age, and your
Speaker 2: financial situation. Those are all the things that you need
Speaker 2: to take into account.
Speaker 1: Do you think that it's always going to be worth
Speaker 1: somebody getting a getting a maintenance plan? I mean, what
Speaker 1: are some of the things that you should.
Speaker 3: Care sitting up?
Speaker 2: Yes, go on, So sorry I lost you completely there.
Speaker 1: The line seems Oh, no worries, No worries, Erica. Sorry,
Speaker 1: I was just asking do you think it's always worth
Speaker 1: somebody getting a maintenance plan? What are the things that
Speaker 1: one ought to consider when buying a car and deciding
Speaker 1: on the type of motorpath? I mean, are some cars
Speaker 1: just if somebody's just kind of buying a little run
Speaker 1: around for less than one hundred thousand round, Is it
Speaker 1: then worth it to have a motor to have a
Speaker 1: maintenance plan?
Speaker 2: Look, it really depends on the kind of driving that
Speaker 2: you're doing and also your risk appetite, because you know,
Speaker 2: for some of us, you know, I'm very risk averse
Speaker 2: when it comes to things like insurances, and I make
Speaker 2: sure I'm fully fully covered, so I will poney up
Speaker 2: personally for the highest premiums because I cannot stand the
Speaker 2: idea that I'm going to have a mechanical failure. And
Speaker 2: I have faced that situation before and I've just found
Speaker 2: for myself it's really worth it. But it comes down
Speaker 2: to whether you clock up high mileage or you drive
Speaker 2: in tough conditions. Under either of those circumstances, the likelihood
Speaker 2: that you're going to face a really expensive repair bill
Speaker 2: are high. They're really quite high. So you know, either
Speaker 2: high mileage which all tough conditions, or both are where
Speaker 2: a service or maintenance plan can really help you to
Speaker 2: budget more predictably and help you upset what I personally
Speaker 2: would consider too hire a risk to take. If your
Speaker 2: car is, you know, relatively new, you've run out of
Speaker 2: service plan or you've run out of you know, warranty
Speaker 2: because it's a it's an older vehicle, but you're not
Speaker 2: driving it very much. Your driving habits tend to be moderate.
Speaker 2: You are not driving rough roads, you're not driving much.
Speaker 2: Your car lives in your garage most of your time.
Speaker 2: You know, zing you could possibly look atself ensuring, you know,
Speaker 2: setting aside that money to say, Okay, if something does
Speaker 2: go wrong, it's pretty unlikely. I'm getting my services done.
Speaker 2: You know, they're not picking up anything disastrous. My car
Speaker 2: is still only got you know, I want to say
Speaker 2: fifty thousand on the clock. The chances of something going
Speaker 2: catastrophically wrong are pretty limited. I'm not going to worry
Speaker 2: about paying for an extended warranty or motor plan. You know,
Speaker 2: that would be the option I would go for under
Speaker 2: those conditions. And you know, whichever option you go for,
Speaker 2: if absolutely crucial to read the fine print, because what
Speaker 2: your original warranty covered may not be the same as
Speaker 2: what your extended warranty might cover, and the same with
Speaker 2: a motorplane. You've got to got to read that fine print.
Speaker 2: There is nothing worse, and I think most of us
Speaker 2: can relate to this then, you know, putting forward a
Speaker 2: large sum of cash only to find out that the
Speaker 2: one thing that goes wrong with your vehicle is the
Speaker 2: one thing that it doesn't cover. What are the.
Speaker 1: Common things that they don't that it wouldn't cover? Erica,
Speaker 1: is there can you highlight that for our listeners at all?
Speaker 1: Is there something that you're like, you know what?
Speaker 4: This is?
Speaker 1: Very often what isn't covered there?
Speaker 2: Yeah, Look, it varies so widely, it's hard to say.
Speaker 2: The real rule of thumb just comes down again to
Speaker 2: the fact that warranties are not going to cover wear
Speaker 2: and tear. It doesn't matter how good your extended warranty is.
Speaker 2: Unless you can prove, for example, that a handle fell off,
Speaker 2: or a light broke out, or the econ stopped working
Speaker 2: because of a manufacturing polt, you're not going to get
Speaker 2: that covered under a warranty. And then, of course the
Speaker 2: owners of previous on you, and that can be very,
Speaker 2: very difficult. If you've got a good supplier and you
Speaker 2: know they're giving you a full breakdown of what's gone
Speaker 2: wrong with your vehicle, and they're honest with you, they
Speaker 2: are going to make sure that whatever they can to
Speaker 2: the full extent possible, they will push it through under
Speaker 2: your warranty, but you can't be you know, that is
Speaker 2: not a guarantee. There are so many things, and of
Speaker 2: course some of the time it's really hard to say
Speaker 2: whether something was actually a manufacturing fault or whether it
Speaker 2: was war and fear over time. And I think you
Speaker 2: know that's something that applies not just to cars, but
Speaker 2: also to electrical appliances. There can be a hidden fault
Speaker 2: that is virtually undetectable unless there's a product recall. You
Speaker 2: never found out and you end up having to pay
Speaker 2: the cash yourself to get something six it was actually
Speaker 2: a manufacturing fault, but neither you nor the service technician
Speaker 2: are the wiser to that. So the warranty is really
Speaker 2: really so limited in that respect. So to me, you know,
Speaker 2: a motor plan can mitigate that risk to and extinct
Speaker 2: insofar as if it is wear and tear and it
Speaker 2: is something that is subject frequently to warrantear like breaks,
Speaker 2: they pads, clutch battery, earboxes, you know, those sorts of things,
Speaker 2: then you are going to be covered for those kinds
Speaker 2: of things. The other thing to bear in mind with
Speaker 2: this conversation is that if you are in an accident
Speaker 2: and something breaks, that's not wear and tear, and that's
Speaker 2: not warranty, you know, specific or applicable. That is a
Speaker 2: different issue again, and that is where your car insurance
Speaker 2: comes in. And the only thing that's going to cover
Speaker 2: you for, supposing that you've got fully comprehensive insurance, is
Speaker 2: that accidental damage, their fire and third party planes. None
Speaker 2: of those things are going to be covered by your warranty.
Speaker 2: So you could be real or motor plans, so you
Speaker 2: could be really unlucky. Let's say, and you've got something
Speaker 2: that is wrong with your vehicle inherently already and it's
Speaker 2: kind of about to fall off or about to go haywire,
Speaker 2: or whatever the case may be. Then you get in
Speaker 2: an awful accident. Let's say somebody bumps into you from
Speaker 2: behind and that item gets damage. You're never going to
Speaker 2: be able to show that that wasn't a result of
Speaker 2: the damage, and that's where your insurance was kicking. So
Speaker 2: that's another important thing to take in mind.
Speaker 1: We've had a couple of voice notes that I want
Speaker 1: to take a listen to Eric here, if you can
Speaker 1: just bend with this just for a second, let's take
Speaker 1: a listen. Christopher and Wesley have sent these voice notes.
Speaker 4: In Hi, SJ. Thanks for the great show. Question from
Speaker 4: our side. Just recently procured an older vehicle with low
Speaker 4: mileage which I financed, and the finance house, a well
Speaker 4: known finance house, apparently had a stipulation that I had
Speaker 4: to take out an extended warranty on the vehicle, I e.
Speaker 4: An aftermarket to a motor light warranty. So another standard warranty.
Speaker 4: Is that a finance requirement? Or was I taken for right?
Speaker 1: Okay, Erica, maybe you want to jump back jump in there.
Speaker 1: Would that ever be a requirement of y a finance
Speaker 1: got right?
Speaker 2: Okay, definitely the listener can take hard. You definitely have
Speaker 2: not been taken for a ride. It's very similar to
Speaker 2: when you take out a bond on your house. You
Speaker 2: are required to pay out in to adequately cover that property.
Speaker 2: Because at the end of the day, if that vehicle
Speaker 2: is a lemon, and we really hope not, the financing
Speaker 2: house is going to require you to repay that loan
Speaker 2: is full and they want to know that you're able
Speaker 2: to do that.
Speaker 1: Let's just take a listen to Wesley's voice note.
Speaker 3: Please and always there from Geval from personal experience, I
Speaker 3: had a I bought a brand new vehicle and I
Speaker 3: had an accident. Unfortunately, due to certain fine brand in
Speaker 3: the insurance, they would not pay for it because the
Speaker 3: refew and the parts alone just to repair a fender,
Speaker 3: a bumper, aheadlight lower control on ninety seven thousand R
Speaker 3: which had to come out of my pocket and in
Speaker 3: the ten thousand towing costs to put it on a
Speaker 3: flatbit to get it there. And this was a distance
Speaker 3: from my house of less than five hundred meters, so
Speaker 3: the costs can really really escalate.
Speaker 1: Sure, thanks for that, Wesley. Ten thousand rand put it
Speaker 1: on a flatbed. Yoh okay, thanks very much. Indeed to
Speaker 1: our guest Erica Liedenberg from Just Money, this has been
Speaker 1: hugely informative the difference between a motor plan, a maintenance
Speaker 1: plan and a motor warranty. Knowing what the difference is
Speaker 1: and reading the fine print could literally save you tens
Speaker 1: of thousands of Rand