A car is one of the biggest purchases you will make. For many people, only purchasing a home will be a more significant financial commitment. It’s natural, then, that you would want to protect this investment. One way to do this is to ensure that your vehicle has a warranty.
When you purchase a brand-new vehicle, it will come with the manufacturer’s factory warranty. This protection includes a powertrain warranty as well as a bumper-to-bumper warranty over a certain period. Bumper-to-bumper warranties vary from manufacturer to manufacturer, but they typically last between three and five years and 36,000 to 60,000 miles. Meanwhile, powertrain warranties can be good for up to 10 years or 100,000 miles.
However, if you buy a used car or an older car, chances are that the warranties will have expired. Fortunately, you can purchase an extended warranty to safeguard your finances. Doing so can prevent the need to spend hundreds or even thousands of dollars on repairs to the engine, transmission, and other vital components and systems.
But even the best extended car warranty might not make sense for everyone. There are benefits and drawbacks to consider with these warranties.
Extended Warranty Pro: Gives You Peace of Mind When Issues Arise
Like anything else you use often, wear and tear will take its toll on vehicles. Eventually, vital parts will fail and break down, even with proper maintenance. This can leave you in inconvenient, even unsafe, situations. Plus, to fix certain issues, you may have to pay hefty prices at the mechanic or dealership.
Also read: Common Types of Car Accidents and How They Occur
With an extended car warranty, you don’t have to come up with a large sum of cash if something goes wrong with your vehicle. This can be especially helpful with used vehicles, which will be much more prone to having serious issues. If you buy an older car and intend to use it frequently and keep it for years, an extended warranty might make a lot of sense.
Extended Warranty Pro: Tailor it to Your Needs
An extended warranty can be flexible to cover what you need most. One of the most common examples is with the bumper-to-bumper warranty, which likely will have expired if you buy a used vehicle. Your vehicle may still have the powertrain warranty intact, but an extended warranty lets you lengthen the bumper-to-bumper portion.
You can also add other elements such as 24-hour roadside assistance or even maintenance services such as oil changes and tire rotations. Your extended warranty may also cover technology in your vehicle, such as computerized equipment and wiring. The additional coverage may come in handy if you don’t have the time to do vehicle maintenance yourself.
Extended Warranty Pro: Handle it all at the Dealership
Buying an extended warranty can be a hassle-free experience. When you purchase your used car from a dealer, you won’t have to worry about working with multiple parties. The dealer will take care of all paperwork, forms, and other required materials. Also, you should be able to get any repairs and parts from the dealership or any other dealership that sells the same model of vehicle.
Extended Warranty Con: Policies Can Be Pricey
Before you act too quickly and purchase an extended warranty, be aware that there are drawbacks to buying one. Buying an extended warranty can possibly be a big gamble. You are buying one with the anticipation that future repairs will exceed the cost of the policy.
However, many people end up spending far less on repairs than they did on the price of the warranty. Extended car warranty costs will vary, but many cost around $2,500. You can expect to pay between $250 and $500 a year for one. Companies may require you to pay more if your vehicle’s mileage exceeds 100,000.
Also, be aware that you will have a deductible to pay when taking care of repairs. This typically amounts to $100. Warranties also usually have a maximum payout per issue. If your transmission dies, make sure your warranty will cover the cost to replace it.
Extended Warranty Con: Doesn’t Cover Everything
You should note that an extended warranty will have limitations. The coverage will exclude certain parts, systems, and components. You need to read the policy carefully and understand everything that it entails.
If you are confused about anything or have any questions, ask a representative to explain in full detail what the warranty covers and does not cover. The last thing you want is to have a serious issue with your vehicle, take it to a shop expecting the warranty to cover the repairs, only to find yourself shelling out big bucks to get your car running again.
Extended Warranty Cons: You Must Go to Certain Shops for Repairs
If you purchase a warranty from a dealer, you will be able to take your vehicle there for repairs, and the plan will cover them. However, if you purchase a warranty from a third party, there will be some limitations to where you can do repairs. The warranty company will have an exclusive list of providers that can perform repair procedures on your car. You may be unfamiliar with these mechanics or repair shops or not have one close by.
One of the biggest challenges you could face with this issue is if your car breaks down or otherwise has repair needs while you are far from home. For example, if you are on vacation in another state or country, a repair shop in the warranty company’s network might be nowhere in the vicinity. In such cases, you would have to bear the brunt of the repair costs without being able to use the warranty.
The Bottom Line
Every customer has different needs. When you start looking for a used vehicle, consider the benefits and drawbacks of buying an extended warranty.
Factors that determine whether it’s a good idea to purchase an extended car warranty include the age of the car you are considering, your driving habits, your budget, and how long you intend to keep the vehicle. As you look at the pros and cons, you will be able to make the right decision and move forward feeling good about maintaining your car’s performance.
