As the details will reveal, an extended warranty is not really comparable to an actual car warranty at all, due to its lack of legal protection. It’s also referred to as a vehicle service contract, mechanical breakdown insurance, or overpriced insurance plan, according to certain experts.
Many car buyers like the peace of mind that car warranties
offer, but they are simply money makers for those that sell them. They cost more than the majority of car owners will get out of them. However, they still remain popular because many buyers don’t have an emergency fund set aside for repairs, despite recommendations to do so. The benefits of a car warranty
Buying a vehicle is often a large investment, so it makes sense that buyers want to insure their assets against costly repairs. However, shopping for a vehicle based on its reliability scores will ensure your best protection, according to Consumer Reports
. Your ownership goals will be the biggest indicator as to whether you need an extended warranty at all. Those planning to keep their car until the end of its life are more likely to need repairs. The value of additional protection is expected to increase year-over-year. Since vehicles are increasingly reliant on technology, fixing computer components is becoming more expensive than standard mechanical repairs.
When buying used, vehicles with less than 80,000 miles have the best coverage options. When buying new, make sure to purchase protection before the factory warranty expires for a greater selection of longer coverage terms. Remember that the price of a car warranty can be negotiated, just like the vehicle’s selling price.
The drawbacks of a car warranty
It is critical to read through the fine print of these service contracts before committing. Coverage often neglects certain key areas of a vehicle. It can also vary based on mileage and the time that’s elapsed since purchasing.
Pay close attention to the deductible, specifically, and whether powertrain, electronics, wheels and tires are covered. Many extended warranties are duplicative of the car warranty already provided by the manufacturer. Newer vehicles have typically low repair costs and most often don’t require additional protection.
There may be limitations on where you can have the vehicle serviced. Depreciation clauses reduce the amount paid for repairs based on mileage. Look into who exactly is responsible for claim payouts.
Consumer Reports
highlights that when coverage is built into financing, interest is also applied to the cost of the car warranty.MORE: Don’t Get Overcharged for Car Repairs
Do I need an extended warranty?
There are several factors to consider when making the decision to purchase an extended warranty. Consider how long you plan to keep the car, your annual mileage, and the vehicle’s reliability.
Experts agree, repair costs need to be considered when purchasing a vehicle. Paying to fix your car out of pocket will most likely cost less than a car warranty over the long run. If you do opt for the additional coverage, it’s advised that you always purchase from a reputable dealership or company.
We also advise that you use the Jerry
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