Five Questions To Ask Before You Take Out an Extended Warranty
Buying a new (or second hand) car is a big purchase (typically second only to buying a house) – and with it comes many long-term considerations that need to be made, so that you are able to enjoy it for all it’s worth.
However, if you’ve shopped for cars for any amount of time, you should already know by now that salespeople will try their hardest to get you to buy extras, including an extended warranty for the car you are buying. Should you say yes?
What to Know Before Buying an Extended Warranty
Protecting your car is important. That’s why it’s smart to do some homework before buying an extended warranty.
Keep these things in mind:
Know the Benefits of Extended Warranties
New cars come with manufacturer warranties, but an extended warranty can cover the costs that factory warranties do not.
Extended warranties can cover roadside assistance, towing, and car rental costs when your vehicle is in the shop.
Remember that even a new factory warranty will expire. Buying an extended warranty will ensure your car is protected as it ages and needs more repairs.
Beware of Scams
Not all extended warranty companies are created equal. Some may try to scam you. Check rankings from reviews, on Facebook and Google, and conduct your own due diligence before signing up ith anyone. If you have never heard of the company before, if they have no online presence and most importantly– no website – red flags should be waving wildly in the air.
Know the Condition of Your Car
- How old is my car?
- How long do I plan to keep it?
- Do I know the repair history on it?
Here are other factors to think about as you consider buying an extended warranty:
- Looking to sell your car? Extended warranties can increase your car’s resale value.
- Benefits like roadside assistance services are offered through some extended warranties.
- An extended warranty from the dealership is not your only option. Auto warranty companies like Motorvaps provide plans that offer more flexibility in auto repair shops, car parts, and more.
- Extended warranties prevent costly repairs from hanging over your head. You can rest assured knowing that you can pay for repairs when you need them.
Five Question to Ask Before Signing on the Dotted Line
- Who backs or guarantees the warranty?
Many dealerships offer third-party warranties from companies. If you are going to purchase an extended warranty, make sure you have researched the institution, not just the dealership. You can use a manufacturer-backed extended warranty at any dealership across the country. A third-party warranty may allow you flexibility to have your car serviced at other approved / registered workshops, without limiting you to dealerships.
- Have you shopped for the best price?
It’s unlikely that an F&I manager will let you shop around while you’re sitting at his desk with a pile of purchase paperwork between the two of you. This research is best done prior to your dealer visit on the day that you finalize your purchase. If the car purchase is already a financial handful, remember you can also shop for a better price after the sale.
Get a price quote from the F&I manager for the warranty he’s offering. Then shop it around by phone with F&I managers at other dealerships in the same way that you compared prices on the car you’re getting ready to buy. Alternatively, shop around online for the best deal and avoid getting your warranty through a dealership entirely.
- Do you know what’s covered?
An extended warranty isn’t the cure-all that some dealers make it out to be. Many wear-and-tear parts — items that will eventually break or wear out — are not covered by most vehicle extended warranties. For these items to be covered, you may want to consider other financial VAPS, such as a maintenance plan, mechanical warranty or service plan.
Many extended warranties come in coverage tiers (silver, gold, platinum, for example), each with its own price and level of coverage. Take the time to read the fine print to determine what is and isn’t covered.
You must also determine who will front the cost for the repair bill. Are the repairs fully covered? Do you have to pay a small excess? Or do you have to pay for the repairs up front and get reimbursed later?
- Will you have peace of mind if you don’t buy it?
The answer here is all up to you. If you’re someone who will always have a nagging feeling that you should have bought the warranty, go ahead and get it. Sometimes there’s no price tag you can put on peace of mind.
- Do you really need it?
Some F&I managers can make you feel that saying no to the extended warranty is like playing Russian roulette with your car. You never know when that costly repair “bullet” might strike. Consider the financial implications you may be forced to face if you do experience issues down the line, and how a small monthly premium may help eradicate this possibility.