You’ve made the decision to get a used car and you want to make sure it continues to run well. An extended warranty is one way you can keep your car running well without breaking the bank. But is it right for you? Before you decide to buy one, make sure you know all the facts.
What is an extended warranty?
An extended warranty, also called “car repair insurance,” or “breakdown insurance,” is a vehicle service contract. You pay the warranty provider a fee – like an insurance premium – and they pay for covered repairs. An extended warranty reduces your risk of expensive repairs, giving you peace of mind. Owners of used cars, which are more likely to need repairs as they age, often find these kinds of plans well worth the cost.
Do I need an extended warranty?
If any of the following apply, you may not need an extended warranty – at least not right away.
You’re buying a newer used car. A newer used car might still be covered under its factory warranty. In that case, you should take full advantage of that warranty. This will give you plenty of time to research extended warranties before the manufacturer’s warranty expires.
Your car is highly reliable. If you are buying a vehicle that is known for being reliable, it might not need many repairs aside from routine maintenance. Check consumer publications to learn about the track record of the cars you’re considering. An extended warranty may not be necessary.
You don’t keep cars very long. Some people like to keep a car until its dying breath, while other get tired of their cars quickly. If you fall into the latter category, it’s possible that you won’t own your car long enough to anticipate major repairs.
Understand what’s covered.
Extended warranties are not all equal. Basic warranties will cover only major repairs on vital parts like the engine or transmission. Premium plans might cover nearly everything but wiper blades and light bulbs. Many plans only cover breakdowns or parts failures, while others cover wear and tear. Some warranties have maximum amounts they will pay on certain repairs. Read the fine print carefully to make sure you are clear on exactly what is and is not covered. You don’t want unpleasant surprises down the road.
Know your warranty provider.
An good warranty is backed by a good company. Thoroughly research extended warranty providers before making a purchase. Pay particular attention to the following:
- Look for an established company with a verifiable track record. In general, large, nationwide companies are more reliable than smaller ones. Read reviews and consult with the Better Business Bureau to get all the information you can about the providers you’re considering.
Customer service. When you need help from your warranty provider, you don’t want to go through a lot of hassle. Choose a company that has a good customer service record. If current clients are happy, chances are you will be too.
Claims process. Submitting claims shouldn’t be a hassle. Get the details on the process for submitting claims. Do repairs need to be preauthorized? Will the company pay the repair shop directly or do you pay out of pocket and submit the bills for reimbursement?
- Many extended warranty providers work with a limited network of repair shops. Make sure the list includes shops that are conveniently located for you, and that have good local reputations. You don’t want to be stuck using a mechanic who doesn’t do good work.
What will it cost me?
The price of an extended warranty for your used car will vary depending on a number of factors. Obviously, the coverage level you choose will make a difference in the price you pay. Other determining factors are similar to those used to determine the cost of auto insurance: type and age of your car, your driving habits, and vehicle mileage among others. In general, you can expect to spend several hundred dollars on a warranty.
To learn more go to www.extendedautowarranty.com.