Re-evaluating your vehicle tracking contract

Well, if not overpaying for your goods and services is important to you, then yes, you should care.

In a Consumerwatch show of a few weeks back on how to cut your monthly expenses without cancelling anything, I briefly related how I realised that my vehicle tracking contract was in its fifth year, having rolled over to month-to-month basis after the so-called initial period of three years, much like a cellphone contract does after two years.

So what happens in that initial period is that you pay off the hardware - the tracking device itself - as part of your monthly subscription. There’s a hardware component and a service component to that amount you pay every month.

It occurred to me that the subscription should reduce from year four to account for the fact that the hardware is paid off, right? That’s what happens with a cellphone contract.

So I made the call to my tracking company and without any discussion, my subscription was dropped from R130 a month to R70  a month, which pleased me rather a lot.

A listener's story 

And that’s the story I told, very briefly, on that Consumerwatch show. Listening that day was Suhail Motala. He realised that his three-year vehicle tracking contract with Netstar had rolled over to a month-to-month basis from last November, but his subscription had remained at R179.

So he contacted the company, Netstar, and was told that from the end of this month his subscription would drop to R100 a month.

And it got better - he then got another call from Netstar to say that the fee would actually be just R60 a month - a saving of a whopping R110 a month.

What’s more, he was told he’d be refunded the “overpayments” he made since November, and last week more than R900 was deposited into his bank account.

So naturally that got me wondering how many other people are paying too much for their tracking service… I asked both Netstar and Tracker why subscriptions weren’t automatically reduced from year 4 when the tracking device was paid off.

Netstar  said the company did automatically reduce the amount to the service-only portion after three years, but only “if the subscription they are paying at that time is more than the relevant monthly service-only fee in force at the time of contract expiry”.

And the company wouldn’t say how often that happens.

In Suhail’s case, I was told, Netstar’s current “recommended retail pricing” for his tracking service was currently substantially more than the R169 a month he’d been paying, which is why that amount was not reduced in November when his three-year initial period ended.

So why did they reduce his subscription by a huge R110 when he made that call? That was a gesture of goodwill and a bid to retain him as a customer, I was told.

Tracker put it like this: “Tracker’s business model does not accommodate a reduction in the monthly subscription at the end of a 36-month contract period.

“In fact, the initial cost of getting a customer on board - including the cost of the hardware and installation - is recouped over a much longer period to enable Tracker to stay competitive in the market from a price perspective.”

So reading between the lines, longstanding customers, who continue to pay up unquestioningly, are subsidising the special deals offered to new ones. 

Blind loyalty most definitely does not pay.

My subscription was reduced to R70 a month "as a goodwill gesture” because that’s the subscription which is offered to new Tracker customers, I was told. 

What to do if your contract is three-years-old. 

So here’s the advice to those with tracking contracts more than three years old:

*Insist on being sent a monthly invoice by your vehicle tracking company, whether your subscription is part of your insurance premium or stand-alone; and

*Re-negotiate your subscription if you switch vehicle insurance companies and especially when your initial three-year period is up, as your hardware is paid off, and you are no longer locked into a lengthy contract, giving your negotiating power.

I gave similar advice in a column I wrote for the Times last week, and I heard from quite a few readers who realised they were in year four, five or six of their tracking contracts and had never questioned their subscriptions, so they made that call and had their subscriptions significantly reduced. Much happiness. 

But as the week wore on I started getting feedback from others who’d tried that and been told, sorry, no reduction. 

If your device is paid off and your service provider is not open to lowering your subscription, you could get a quote from a competitor, and if it’s a lot cheaper, give the required one month’s notice to your non-negotiable current service provider, and sign up with their competitor, and you’ll get to swap your three-year-old tracking device for a brand new one.

Of course, the trouble with that is that you will become committed to a new three-year contract, whether you sell the car during that time or not.

Another is to re-assess whether you want or need the tracking service at all. If your car is older and not the hijackers’ hit list, your insurer may not require it to have a tracking device at all.