Is It Worth Getting An Extended Warranty For Your Car?
You’ve decided to get yourself a new set of wheels, and all of the wheeling and dealing is just about done. But then the finance manager at the dealership pops the big question: Are you getting an extended warranty for your new ride? The wheels in your head start turning and you’re not sure what to answer…
What Exactly Is An Extended Warranty?
An extended warranty, sometimes called a service contract, consists of repair coverage that takes over once the manufacturer’s warranty has expired. The warranty usually includes bumper-to-bumper coverage. It’s important to note that you don’t have to buy an extended warranty at the same time that you close the deal on a new vehicle; in fact, you can buy the warranty at any time. Keep in mind, however, that purchasing an extended warranty after the manufacturer’s warranty expires could be much more expensive than buying one before the manufacturer’s warranty expires.
Are The Benefits Worth It?
It might surprise you to learn that many, if not most, consumer advocates advise against buying extended warranties. Why? Because this type of warranty often provides more coverage than typical drivers need. A Consumer Reports National Research Center survey taken in 2013 found that 55 percent of people who agreed to an extended warranty never put it to use. Additionally, those who did end up using the warranty found that the average cost of repairs was hundreds of dollars less, on average, than the cost of the warranty itself.
Because manufacturing standards have significantly improved over the years, vehicles are becoming increasingly reliable, rendering extended warranties less important and beneficial. If you routinely buy a new car every three to four years, passing on the extended warranty is a safe bet. If, however, you’re planning on holding on to your vehicle for the long haul and putting hundreds of thousands of miles on the odometer, an extended warranty might serve you well.
Getting Peace Of Mind
You want to enjoy your new vehicle, not worry every time you hear the slightest noise, notice a tiny rattle, or scan the dashboard for an engine repair or service needed notice. It’s important to know what is and isn’t covered by an extended warranty, and just how much peace of mind it will offer you in the long run.
An extended warranty usually doesn’t cover items that wear out fairly frequently such as wheel cylinders, fuel and water pumps, belts, and brake pads and calipers. After reviewing the warranty’s “does not” cover list, you may decide that the warranty doesn’t afford you enough of a safety net to justify its cost.
Who Pays For Repairs Covered By An Extended Warranty?
Before you sign on the extended warranty dotted line, find out who will be responsible for the initial cost of covered repairs: Under some warranties the mechanic is paid directly, while other warranties stipulate that the consumer must pay for any repair costs upfront and is later reimbursed. An extended warranty provided by the dealership may require that repairs can be completed only at that specific dealership. An extended warranty that has the backing of the vehicle manufacturer, however, may allow for repairs to be completed at the dealership of your choice.