An extended car warranty can cover repair bills for a certain number of years or miles, reducing your financial risk. But they come at a cost and many people don’t use them.
To make the best choice, review your options and research companies carefully. Consider the following factors when deciding whether an extended auto warranty is right for you:
Cost
Unlike a manufacturer’s warranty, which is included in the price of a new car, extended warranties are offered by third-party providers and can cost extra. Depending on the contract, deductibles and coverage options, a plan can range from several hundred to a few thousand dollars per year.
A warranty’s cost should be compared to the expected annual cost of repairs to determine whether it provides value. For drivers of reliable cars with inexpensive repair costs, a warranty may not be worth the extra money. However, for those who drive older vehicles or own a less-reliable brand of car, a warranty can provide peace of mind and save on the cost of repairs.
CR recommends shoppers compare prices, benefits and coverage of multiple warranties before making a decision. Some warranty providers offer monthly payments and flexible terms, which can make them a good choice for those who are hesitant to invest in a lump-sum payment. Other providers offer a variety of coverage types, such as powertrain and bumper-to-bumper plans.
Coverage
An extended car warranty typically covers repair costs that aren’t covered by your vehicle’s manufacturer’s warranty, or the remainder of the factory warranty. However, some car warranties have service requirements that can void the contract, and others have depreciation clauses that reduce coverage over time. Some extended warranties also offer only limited roadside assistance and tow truck services. Some drivers have also discovered that the company behind their extended car warranty went out of business when they needed a repair, or had issues with receiving a refund on the unused portion of their contract.
Some drivers may find it worthwhile to purchase a vehicle service contract, especially for older vehicles or those that have surpassed the manufacturer’s warranty coverage. But before you make a decision, compare plans to find the best one for your needs and budget. And look for a provider that offers flexible payment options and a money-back guarantee. EnduranceAdvantage, for example, provides a variety of tiers of extended protection, including bumper-to-bumper and stated-component coverage, as well as prepaid maintenance plans.
Convenience
A good extended car warranty will have an extensive network of ASE-certified mechanics. It also should cover roadside assistance and rental car coverage. Ideally, it will have a zero-deductible and provide money-back guarantees. It should also be easy to compare plans and costs from different providers.
Many third-party car warranty providers allow you to purchase their plans at any time after a vehicle’s manufacturer warranty expires. You can pay upfront, on a monthly basis or roll the plan into your car’s financing. Some providers offer a 30-day money-back guarantee and prorated refunds.
An extended warranty can help you save money on repairs by preventing unnecessary expenses. However, you should always shop for a plan with a low deductible and a fair price, as well as read the contract details carefully to ensure that you’re getting the best value for your money. It’s also wise to buy a reliable vehicle and perform regular maintenance on it.
Flexibility
The price and coverage offered by extended car warranties can vary widely, so it’s important to shop around. The best way to find the right plan is to read reviews and compare quotes from multiple providers. A reputable company will offer a variety of plans and features, including roadside assistance, locksmith policy and flexible deductibles.
If you’re planning to sell your car in the near future, check whether it offers a transferable warranty. This feature could help boost resale value and make the car more attractive to buyers.
If you’re a high-mileage driver, it may be worth investing in an extended car warranty to protect your vehicle from costly repairs. However, it’s important to consider your driving habits and financial situation before purchasing a plan. Also, remember that extended warranties do not cover maintenance items like oil changes and tune-ups. They’re designed to cover major repair bills after the manufacturer’s bumper-to-bumper warranty expires.
