An extended vehicle warranty is a car repair protection plan that kicks in after your manufacturer’s warranty expires. But like any other expense, it should be carefully considered before you sign on the dotted line.
Check for a policy with no deductible and no waiting periods for reimbursement. Read the fine print for exclusions that may not be relevant to you, such as commercial use and acts of god.
Peace of Mind
The thrill of buying a new vehicle can overwhelm practical considerations. Choosing the color that best reflects your personality and deciding how many bells and whistles to include can be incredibly fun, but it’s important to consider the impact of the decision on your budget.
Buying an extended warranty can give you peace of mind if the car you want is older, has high mileage or lacks mechanical reliability. In addition to ensuring you’ll have money available for unexpected repairs, these contracts can also provide coverage for routine maintenance and even roadside assistance.
Thoroughly research warranties and providers before making a purchase. Be sure to read the fine print, compare prices and look for a company with an excellent reputation. You can usually find a variety of plans and customize them to fit your needs. It’s also important to choose a plan that does not restrict where you can get your car repaired, such as only at the selling dealership.
Coverage Options
Many extended car warranties are offered by third-party providers, so shoppers should take some time to compare the options available. Consider things like payment plans, deductibles, wait times and cancellation policies. Look at sample contracts to see what each plan covers.
Some companies offer bumper-to-bumper coverage, which is the most comprehensive. Others cover specific systems, such as the air conditioning, electrical, steering and suspension. Still others focus on the powertrain, which includes the engine, transmission and drive system.
Buyers should also find out if the warranty company is rated well by customers and experts. CR’s review score is based on the types of coverage available, the cost per year and additional benefits like roadside assistance. The company’s reputation for customer service and the quality of its extended vehicle warranty plans are also factored into the rating. A good provider should also offer flexible terms. Buyers can pay for the extended warranty upfront, make monthly payments or roll it into their loan.
Claims Process
The claims process associated with an extended vehicle warranty varies depending on the provider. Some companies require you to visit a specified repair facility, while others allow you to choose any certified mechanic. You will also need to provide proof of ownership, as well as a written estimate or final invoice for the repairs needed.
Some providers may deny your claim if they suspect you mistreated or neglected your car, so be sure to follow all maintenance guidelines. Similarly, using your car for ride-sharing work might void the coverage, so check your contract.
When shopping for an extended warranty, look for a provider with a solid reputation. Avoid companies that cold call consumers or use a manufacturer’s logo in their marketing materials, as these are likely to be fraudulent. Also, make sure you read the terms and conditions carefully to ensure you understand exactly what is and isn’t covered by the plan. This will help you avoid being mis-sold a warranty that is unsuitable for your needs.
Cost
While a warranty may seem like an attractive idea, many drivers who purchase one end up never using it or find that the repairs they need are not covered. It is important to read the contract’s fine print and compare coverage options before making a decision. It’s also crucial to choose a company with a good reputation and a history of transparency when it comes to pricing.
Depending on the type of coverage you select and any deductibles you agree to pay, an extended warranty can cost anywhere from $500 to $3,000. You can buy a manufacturer-backed vehicle service contract (VSC) or motor vehicle insurance (MVI) at the dealership when purchasing your car, or you can get a quote from third party providers online. Some companies will even offer discounts for first time customers, military personnel and teachers. If you are not comfortable negotiating a price, Ramsey suggests that you consider saving money in a rainy-day fund instead of an extended warranty.
