Vehicle Extended Warranty: To Buy Or Not To Buy?
Fear of expensive car repairs drives people to consider extended warranties for their cars. To be sure, extended warranties may save you thousands of dollars, but are they really necessary?
What, exactly, is an extended warranty?
An extended warranty covers the cost of certain repairs and maintenance after your factory (initial) coverage runs out. These warranties are usually offered by dealers when you buy a car. They’re also available from third parties.
They can be cost effective.
In some cases, extended warranties will pay themselves off in the long-run. Repairs to your car’s transmission, for example, may cost around $2,000. Air conditioning may run up to $700. If you have an extended warranty protecting these parts, you will probably recoup the expenses paid toward the coverage in the case of a malfunction. On the other hand, you may not ever need to repair anything while you’re covered. Read on to learn why you might not need an extended warranty.
What do I need to know before deciding?
However reassuring extended warranties may be, they might not be the right thing for you. Before adding this expense to your new car bill, ask yourself these questions:
How long are you going to keep your car? You don’t need extended coverage if you’re going to sell it before the original warranty expires. Manufacturers now offer comprehensive long-term warranties that are included with the vehicle. You may not need extra coverage after all. You may also be eligible for after warranty assistance.
Do you have enough savings to cover unexpected, potentially expensive car repairs? If you do, it’s OK to forgo vehicle extended warranty coverage.
How reliable is your car? It’s not uncommon to put upwards of 70,000 miles on a vehicle without running into any mechanical problems, especially if you maintain it well. Although, some cars are more reliable than others. Take a look at JD Power’s dependability ratings for more information.
What are the terms of the warranty? What’s the time or mileage limit, what is covered (which parts), what’s the deductible and who does the repairs are all considerations to investigate. When the policy and the cost don’t match up, look elsewhere.
Even if you do decide an extended warranty is the smart thing to do, there’s no need to buy it at the dealership or right off the bat. You’ll still be able to purchase one later, even years down the road. However, your car may need to be inspected first.
For more information about extended warranties, see our extended warranty value survey results.
Now that you know the basics of vehicle extended warranties, perhaps it’s time to get quotes for the vehicles you like. Get them online, without visiting any dealerships. Easily locate the best deals. Click here to learn more.
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