Pros and Cons of Buying an Extended Warranty for a Car
Driving home with a new car — or new to you, at least — is an exciting experience. But the car-buying process can be stressful for some. Getting the best deal requires you to spend time researching what you can afford and comparing different makes and models.
When it’s time to discuss the contract, however, many people haven’t spent much time thinking about whether or not they should buy an extended warranty.
Buying an extended warranty is all about your personal tolerance for risk, and your need for financial security in the event of electrical or mechanical breakdown.
Benefits of an Extended Warranty for a Car
- You Can Budget Your Car Expenses More Accurately
If your car suffers a major failure after the original warranty has expired, the expense of fixing it may be more than you would have paid for an extended warranty. Buying an extended warranty on a used car is a way of providing yourself with security in case unforeseen problems arise. A good extended warranty company will pay for covered repairs directly so you won’t be hit with unexpected repair bills.
- Extended Warranties Can Be Customized
You may find that the original manufacturer’s warranty is rather light in a particular area, and you may want to use an extended warranty to make your coverage more complete. An example is that a manufacturer may provide for longer coverage of the power train, while ending bumper-to-bumper coverage sooner. Extended warranty companies offer many customizable options, so you can choose only the coverage that you really need. Likewise, you can negotiate that the cost of an extended warranty.
- Peace of Mind
Whether or not you can afford expensive repairs down the road, buying an extended car warranty means you simply don’t need to bother with it. You can rest easy knowing that, if something happens, it’s not your financial problem.
Disadvantages of an Extended Warranty for a Car
- You May Be Limited to Specific Repair Providers
When shopping for a third-party warranty provider, it’s very important to check and make sure they have relationships with enough repair shops in your area. If there’s any chance you might be moving to a new region during your ownership of the car, it’s good to make sure that a warranty would be usable in your new area before purchasing it.
- Extended Warranties Are a “Grudge Purchase”
How often do you lament the debit order coming off for your vehicle’s general insurance every month? How many times have you wanted to cancel? Imagine the financial implication (especially on a financed vehicle) if you were to be involved in an accident and held personally liable for repairs to both your own vehicle and the other party’s vehicle (even if you were not at faulty or the cause of the accident?)
As much as we don’t enjoy paying towards a product that serves no “immediate” purpose, the risk we run by NOT having it in place far outweighs the “inconvenience” of paying for it each month.