Do I Really Need an Extended Car Warranty?
You might be tempted to roll the cost of an extended warranty into your new car purchase, but that means you’re paying up front—including interest—for a service you won’t use for years.
A good recommendation may be to wait until your car is near the end of its original (manufacturers) warranty, and then shopping around for a factory-backed extended warranty. By then, you’ll know how reliable the car is and how much repairs cost. Get quotes from several dealers and third-party product suppliers, not just the one you bought your car from. You’ll likely find that third party suppliers are far cheaper, include more, and are more flexible in terms of added coverage.
Is an Extended Warranty Really Necessary?
Different warranties cover different repairs, but basically an extended warranty kicks in after the manufacturer’s warranty expires. At the core of the “need” question is how long do you plan to keep the car? If you trade-in a car every two or three years, chances are the warranty that came with the car will still be in force (check this first!) If you keep a car for five years or longer, an extended warranty may pay for itself.
When Is The Best Time To Buy An Extended Warranty?
As with most products and services offered in the F&I office, an extended warranty doesn’t have to be purchased when you buy the car. In fact, you can usually buy a warranty any time before the car’s manufacturer warranty expires. Moreover, you don’t have to buy it from the dealership where you purchased the car. The only advantage to buying it as part of a new-car purchase is that you can roll it into the financing and monthly payments. This means you will wind up paying more for it over the long haul, but you don’t have to pay one lump sum.
Extended Car Warranties
So where does an extended warranty help the end user? If your car breaks down after the bumper-to-bumper warranty expires (also known as the manufacturer warranty), you’ll have to pay to get it fixed. But if you bought that extended warranty, as the dealer recommended, the repair will be made at no cost to you.
Extended warranties come in a dizzying combination of mileage extensions and excesses that can lengthen the bumper-to-bumper warranty. Few details are available online because the dealer wants you to contact it directly — and get a sales pitch. Opting to take out an extended warranty through a third party means their products are often are bundled with other types of coverage, like included roadside assistance etc., and given names such as the platinum or silver plan.
The dealer might sell third-party warranties, which almost always cost less; they are issued by a company not connected with the carmaker. These warranties might require you to pay for repairs yourself and then apply for reimbursement. Irrespective, if it saves you money and provides you with the coverage and peace of mind you need, this may very well be the better deal.
Extended Car Warranties – Risk vs Savings
At the heart of the extended warranty issue are these questions: How likely is the car to break down? And if it does, will the repairs be serious — and pricey — or minor? Cars are increasingly complex, and dealers often pitch extended warranties by saying that automotive computer malfunctions are extremely expensive to fix.
Consider these questions when you’re deciding whether to get an extended car warranty:
- Are you willing to pass up the extended warranty, saving money on your total monthly car costs now but possibly having to pay for repairs yourself?
- Will the cost of repairs exceed what you pay for the warranty? This is usually the case. Consider this strongly, especially when working in budget constraints.