Extended warranties are add-ons to the warranties that manufacturers offer with their products. They typically kick in at the end of a factory warranty and “extend” the time that a vehicle is covered. The question for many people is: Are they worth buying?
Well, car dealers will often suggest them because they provide the customer with the security that any future repairs are covered. Just like with any insurance product, this can lower your financial risk when you use a product for a long time. On the other hand, some will argue that the probability that you will need the longer coverage is low with some products? If that’s the case, it might be best to save your money.
There isn’t really a right or wrong answer to the question. Extended warranties are great products for some people, and not so good for others. In order to help your chose, here are some pros and cons to consider.
As our friends at Kindle Autoplaza of Cape May Court House, NJ, point out that if you plan to keep your vehicle past the expiration of the factory warranty, an extended warranty will buy you piece of mind. Although this will cost you additional money, you may be able to fold the payments of your extended warranty into your monthly new-car payments. Boiling it right down, extended warranties eliminate the risk that you will get socked with a big repair bill in the future.
Some will argue that there are downsides to extended warranties, as well. Yes, having an extended warranty gives you piece of mind, but if you never need it, “why buy it.” Also, another item to consider is: extended warranty coverage. Be careful, an extended warranty might not cover the same items that the factory warranty does. This can be especially true with third-party extended warranties. It’s usually best to buy an extended warranty from a car dealer.
The Company Behind the Warranty
If you are considering an extended warranty, another detail to look at is the issuing company. In other words, who is the company behind the extended warranty and are they a good company. In some cases, the insurance company is the manufacturer themselves. This is usually going to be a good warranty because a major name is backing up the product. Quite often, though, dealers offer warranties issued by third-party insurance companies. In this case, do your research and make sure a good company is behind the product.
Factor the Factory Warranty into Your Decision
Some argue that given the increased reliability of modern vehicles across the board, purchasing an extended warranty isn’t necessary. That’s especially true if the warranty offered from the original-equipment manufacturer is quite long to begin with – for example, Hyundai offers a 5-year/60,000-mile bumper-to-bumper warranty and a 10-year/100,000-mile powertrain warranty.
When It Really Makes Sense
Where an extended warranty might make the most sense is when purchasing a pre-owned premium luxury car from a European manufacturer. That’s because these high-end, feature-packed machines can be quite expensive to repair.
There is no right and wrong answer to the question of whether you should buy an extended warranty. Do your research and the result should make more sense when you have collected all the data.