Car buyers crave reliability, but that doesn’t necessarily make extended warranties worth it. Whether you get one from the manufacturer or a third-party provider, these plans limit your financial risk for a fixed amount of time.
But are they really? This article will help you decide if an extended warranty on your new or used vehicle is worth it.
Cost
When considering an extended warranty, it’s important to carefully consider the fine print. Many warranties include service requirements, such as only using certified repair shops or requiring you to pay for the initial repairs before they are reimbursed by the warranty provider. They also often exclude routine maintenance, like oil changes or new tires.
If you know you won’t be able to afford major repairs after the manufacturer’s warranty runs out, an extended car warranty may be worth it. However, if you can easily come up with the money for repairs or have savings set aside, then it’s probably not necessary to purchase a vehicle service contract.
Peace of Mind
A car warranty offers peace of mind by limiting financial risk for a set period of time. However, extended warranties can be expensive and don’t always cover all repairs. In fact, a Consumer Reports member survey found that people who use their extended warranties typically pay more for coverage than they receive back in direct benefits.
It’s important to consider your current financial situation before buying an extended warranty. If you own a vehicle known for reliability or you have enough savings to pay for unexpected repairs, an extended warranty may not be necessary.
You can save money by shopping around for the best price on an extended warranty. Call the dealership and ask about warranty pricing, then contact third-party providers to compare cost and coverage options. You can even negotiate with the dealer, if you do enough research ahead of time. Candace Baker is a writer for WalletHub, a personal finance website. She specializes in researching car insurance topics, producing educational content and answering reader questions. She has a bachelor’s degree in journalism from The University of Texas at Austin.
Reliability
The decision to buy an extended warranty should be made after carefully considering your vehicle’s reliability, risk tolerance and financial situation. An extended warranty may help defray repair costs for those who drive long distances and rack up miles quickly. However, many people who purchase extended warranties never use them, so it’s important to consider your own driving habits and how likely you are to need the coverage before making a decision.
You should also check out the reputation of the warranty provider you’re considering purchasing from and find out whether they pay auto repair providers directly or reimburse customers for covered repairs. Some extended warranty providers take weeks or even months to reimburse their customers, which can be a major hassle for those who need money for car repairs immediately. Lastly, you should find out if the car warranty will transfer to a new owner in case you decide to sell your vehicle in the future.
Customization
Many third-party warranty providers offer a variety of plans that are customizable to your specific needs. For example, you can choose between a bumper-to-bumper plan that covers most parts and components or a powertrain-only plan that only covers certain items. You can also choose whether you want a warranty with a zero-deductible or roadside assistance, as well as other features that may be important to your financial situation.
The best car extended warranty companies have a solid reputation for customer service and responsiveness. Look for a company with a long history in the industry and high ratings with the Better Business Bureau and other consumer review sites. It’s also worth shopping around to find the best deal. If you are a great negotiator, you can even save money by getting the warranty during your vehicle purchase and wrapping it into your financing. This will boost the salesperson’s commission and profits, but it won’t provide much value to you.is an extended car warranty worth it