When you buy a new car, you’re likely to be offered an extended warranty at the dealership. You may also see extended warranties offered by auto clubs, banks and credit unions as well as insurers that offer mechanical breakdown coverage (sometimes called “auto insurance”). These warranties vary in terms of what they cover, how long they last and their price. It’s important to weigh the pros and cons of each before deciding whether to purchase a warranty or not.
Most extended warranties are a “wrap” policy that covers some non-powertrain vehicle components after the manufacturer’s bumper-to-bumper new car warranty expires, and some plans include roadside assistance. In most cases, however, you’ll have to pay the deductible for any repairs before the extended warranty will kick in. If you decide to purchase a warranty, it’s a good idea to find out the cost of the deductible and any other repair costs that aren’t covered by the plan before you sign on the dotted line.
Many companies will let you shop around for the best price and coverage before allowing you to make a decision. That’s a good thing, as not all extended warranties are created equal. When evaluating potential providers, check out the company’s reputation by examining customer reviews and complaints on the BBB and Trustpilot. Look for a customer service team that cares about responding to negative feedback and offers suggestions for resolution.
Whether you’re buying a new or used car, doing your homework ahead of time can help you find a great deal and a reliable vehicle. Besides checking out Consumer Reports reliability ratings, you should also look for long term ownership data and testimonials on the car you’re considering purchasing.
If you’re someone who can’t sleep the night before their vehicle’s standard warranty expires for fear of significant repair bills, an extended warranty might be worth the investment. But, if you’re already saving money for unexpected car repairs or have enough cash in reserve to cover any repair expenses, an extended warranty might be unnecessary.
When considering whether or not to purchase an extended warranty, you’ll want to keep in mind that the value of a new car depreciates over time. Adding an extended warranty to a new car raises its loan-to-value ratio, which increases the risk of your vehicle being declared a total loss in a crash or stolen before its original warranty runs out.
Similarly, if you buy an extended warranty on a used car, it will reduce the amount of money you can get for the car when you sell it or trade it in later on. It can also increase your loan payments or require you to make a larger down payment than if you purchased the car without an extended warranty. buy extended warranty for car