Extended Warranty: Yes or No?
Extended car warranties are there to protect against both normal wear and tear and unexpected malfunctions. With an extended warranty that provides sufficient coverage, you can save several thousand dollars over the life of your car. These warranties are often worthwhile just because of the peace of mind they provide, and they provide extra bargaining power when it comes time to sell (that is, if they are transferable). Some warranties also cover rental cars, towing fees and routine maintenance. Here are some of the advantages and disadvantages to purchasing an extended car warranty.
Advantages
New vehicles typically come with warranties that last for three years or thirty-six thousand miles, whichever comes first. Breakdowns usually occur just after the warranty runs out, and the extended warranty protects against this. You can choose basic plans that cover major components, or a comprehensive plan that covers almost everything including roadside assistance. If you want complete protection against mechanical malfunction without worries, even if you are buying a new car, then an extended warranty is a viable option for you.
Disadvantages
Depending on the make, model and year of the car, along with its mileage at the time you buy the warranty, the plan can cost anywhere from a few hundred to several thousand dollars. Plans bought from a dealer will require that you bring it back there for service calls, which can be a problem if you relocate. Other plans require that an often-steep deductible be paid first. Depending on your choice of plan, you may have to buy additional non-covered parts. And, if you don't need service before the warranty expires, you won't get your money back.
Before you buy an extended warranty, shop around and compare the different plans available. When you buy, think about how long you will have the car and how much you will use it. Some warranties require upfront payment for repairs, and you get reimbursed later. Think about the level of warranty service you'll require before you decide- you don't want to pay for too much warranty!
Buying an extended warranty can mean more hassle during negotiations, as you figure out the language of the contract and how much is covered, as well as how much you will pay. There are companies that deliberately leave large loopholes in their contracts- be sure to check the company's reputation with Consumer Reports and the Better Business Bureau.