Should You Buy Extended Car Warranty?
Buy Extended Car Warranty
Buying an extended car warranty can give you peace of mind that you’ll be able to cover the cost of expensive repairs should anything go wrong. These warranties, also called “vehicle service contracts” or “auto protection plans,” are offered by manufacturers, dealers and third-party companies. While they’re often advertised for new cars, they can also be available on certified pre-owned vehicles and used models.
The question of whether or not to buy an extended warranty depends on the buyer’s risk tolerance, financial situation and the vehicle’s reliability. The best way to figure out if it makes sense to purchase one is to carefully consider all of these factors before making a decision.
Most buyers are swayed by a promise of financial protection. However, a Consumer Reports member survey found that consumers paid more for extended warranties than they got back in benefits. That’s not to say that an extended warranty is a bad idea, but it’s important to fully understand how these warranties work before purchasing one.
For instance, it’s important to know if the coverage will pay for only certain parts or systems (as opposed to covering the entire vehicle), and if there’s a deductible, how much that will be. The length of time that the coverage lasts is another factor, as some policies have a set term while others are based on mileage.
It’s also a good idea to find out if the warranty provider requires you to use their network of service centers or if you can take your vehicle to any repair shop. If the latter is the case, it’s worth comparing the service providers with other third-party options to get a better feel for which ones have the best track record.
In addition, check the company’s customer-service reputation and history of settling claims. Some shady extended warranty and vehicle service contract companies change business names to avoid negative publicity, which can result in you losing money on your policy.
A final factor to consider is how likely it is that you’ll need an extended warranty. If you’re someone who has trouble sleeping when a standard manufacturer warranty expires, or if a costly repair bill would eat up your monthly budget, then the peace of mind an extended warranty provides may be worth it for you.
Otherwise, it’s a good idea to save the money you’d spend on a warranty as part of an emergency savings fund or in a sinking fund for big expenses. You can start this by setting up automatic transfers from your checking account each paycheck to build a cash cushion. If you’re a cautious driver and your current car has an excellent track record, then it might make more sense to skip the warranty and save that extra cash for repairs in the future. That’s a great reason to do a thorough Carfax report before you buy any used car to see what repairs it’s had in the past. buy extended car warranty