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Extended Warranties
Some of the most frequently asked questions by those buying new and used
vehicles concerns extended warranties. Are they a good buy? Will they save me money or will they cost me money? If I decide to buy an extended warranty, should I buy it from the dealer
or use a different source? The answers depend on several factors:
1) How long do you intend to keep the car?
2) What is the price
of the extended warranty?
3) What is the coverage
of the extended warranty?
In their final analysis, extended warranties are insurance policies. Their coverage begins after the expiration
of the factory warranty on a new car, and either adds to or becomes the primary warranty coverage on a used car.
On a new car,
the first question that you must ask yourself is how long you intend to keep the vehicle. If the standard factory
warranty is for 3 years or 36,000 miles (whichever comes first) and your intentions are to keep the car for 2 or
3 years, it probably makes no sense to purchase an extended warranty (if you only keep the car for those 2 or 3
years, you will never have the opportunity to use the extended warranty). If, however, your plans are to keep the
car "until the wheels fall off" (hopefully a long time from when you buy it) an extended warranty would be a valid consideration.
On a used car,
you must determine what your standard warranty coverage will be from the dealership. These warranties can vary
from a very short period (a month, for example), up to longer periods (up to a year of coverage). In addition,
if you are buying a late model vehicle, there is a good chance that the balance of the factory warranty may be
in effect. This will depend on the mileage on the car and the time since it was originally titled, since all factory
warranties end when either the time or mileage limit has been reached, whichever comes first. In all probability,
you will be keeping the car longer than the warranty period offered by the dealership, so you would most likely
have access to extended warranty protection. Buying some sort of warranty protection, depending on the price, is
usually a good idea when purchasing a used car.
What does it cost?
The prices for extended warranties can range all over the price spectrum. If you are considering buying one from
a dealership, it is important to know that they are a source of profit for the dealer--many times, a large source
of profit. It is recommended that you compare any prices before you commit to a purchase. Warranty Direct
sells extended warranties direct over the Internet and offers savings up to 60%. This is a good place to make a
price (and coverage) comparison. With well over 1 million plans sold, in-house claims handling and verifiable references,
you won't find a more reliable firm to entrust your car to. More information.
What does it cover?
Like prices, the coverage offered by different extended warranties can vary a great deal. Some will cover only
breakdowns of major components, others will virtually mirror the factory coverage. Read the fine print! It will
not only tell you what will
and will not
be covered, the fine print will list any exclusions that you need to be aware of.
In the final analysis, you need to decide whether the cost of any potential repairs to the vehicle will exceed
the cost of the extended warranty. Like any insurance, an extended warranty only has value if it is used, other
than the peace of mind that you gain by knowing that a major covered repair will come out of the warranty company's
pocket, rather than yours.
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