Maybe this has happened to you: a friend or co-worker greets you with a self-satisfied grin on their face, and when you inquire as to their newfound joy, they usher you out to the parking lot to show off their new ride. They bought it used, of course, but it’s new to them – that counts, right? Plus, they explain, it was a “great deal”. The months start to pass and it gradually dawns on you that you’re seeing less and less of your once-grinning cohort. Soon enough, though, you do run into this person and vaguely inquire just where they’ve been hiding. Sadly, you feel a certain sense of pity when they can’t look you in the eye and say “Repair Shop” at the same time.
Getting a great deal on a car is a beautiful thing, whether it is new or used. However, the informed buyer realizes that no matter the make or model, vehicles can and will break down. That is why it is often a good idea to look into the purchase of an extended auto warranty.
With just one or two major repairs an extended warranty can save you money, but it is important to find one that suits your needs. Try to ballpark how long you plan to be the owner of this vehicle and how many miles you plan to put on the odometer. If you find you would prefer to be a title-holder for just a short time and have a brief commute to work, an extended warranty is probably not for you. If you travel often and can’t remember the last time you purchased a car, it could save you from the fate of your friend.
Extended warranties, like the vehicles they cover, come in many shapes and sizes. After you have estimated your length of ownership and mileage, it’s time to decide which warranty is the best fit. Some protect just the power-train; some include wear-and-tear parts such as fan belts or brake pads. You can also purchase an “exclusionary” warranty (or “bumper-to-bumper”), listing only what it does not cover – even a lengthy list of exclusions will typically provide more coverage than a warranty only documenting what is protected. Consider your own driving history and what your previous repairs have involved when choosing your plan.
Along with wear-and-tear, some warranties provide roadside assistance and other services. If you travel often, you might look into a plan that includes food and lodging costs if you break down more than 100 miles from home. Many warranties will provide rental car reimbursement as well.
Deductibles can also vary in an extended warranty. Most are $200 or less, but make sure to determine whether the deductible is “per repair” or “per visit”. If you go into the shop with a bad transmission, leaky oil filter and rattling muffler, a per repair warranty will charge you three deductibles. A lower deductible means a more expensive warranty, but they can pay for themselves quicker than you might think.
You can purchase an extended warranty at the time you acquire the vehicle or decide to wait a while. If you are buying a late-model used car, the limited factory warranty might still be in effect and may be transferable. A “certified” used car from a dealership will likely include an extension of the original factory warranty – but only on certain parts.
It is always a good idea to compare one dealership’s warranty cost with another’s, and there are viable options beyond the dealership for purchasing an extended warranty that can be less expensive. Several online companies offer excellent warranty coverage and pricing – for instance, 5 Star Warranty, a trusted AutoExtra.com partner. Many of these websites are happy to provide free price quotes for whatever kind of coverage you are seeking.
Be wary if a warranty requires a cash layout – that is, you pay the repair cost initially and get a reimbursement after sending in the receipts, which does not happen overnight. Many warranty providers will speak directly to your service center and pay for repairs over the phone with a credit card.
Another consideration is where you can get your repairs done. Most warranties are fairly flexible in this regard but some will limit your choices to one kind of facility or even one location. Again, this is a cost/benefit issue where you can decide if less limitation is worth having.
Finally, it is important to know who is backing the warranty. An after-market warranty is from an independent company and you should check their credit rating with Standard & Poor’s, Moody’s or a similar institution. Warranties that are backed by the manufacturer are typically more expensive but their financial security is rarely an issue.
An extended warranty can be a great investment, especially with the current rise in repair costs. Often, a warranty will pay for itself in only a few repairs and it provides a level of comfort and security – so the next time you show off your new ride to an associate or friend, you can do it with confidence.