Extended Auto Warranty Advice


Common extended warranty questions and answers, including whether or not you actually need one


What is an extended warranty?

Simply put, an extended warranty is similar to an insurance policy that protects you against vehicle repair costs once your car's original warranty expires.

Are all extended warranties created equal?

There are two types of extended warranties — those offered by manufacturers and those offered by independent companies. Manufacturer extended warranties are usually an extension of your car's original warranty, covering the cost of dealership repairs and service after the time the original manufacturer's warranty expires.   Independent extended warranties are typically offered by third party organizations or insurance carriers.  In addition to allowing for dealership repairs, independent warranties usually allow for repairs at other facilities.   

What are the advantages of extended warranties?

Extended warranties are designed to protect you from unexpected, costly repairs and many extended warranty programs can be transferred to a new owner at minimal cost, should you decide to sell your car in the future. There are other perks associated with extended warranties, including trip-interruption coverage should your car break down while you're on the road, towing coverage and rental car savings.  In short, the advantages of an extended warranty include protecting you from expensive automotive repair costs and as an incentive to future buyers when it comes time to sell your car.

What are the disadvantages of extended warranties?

Extended warranties fall short when it comes to covering a vehicle comprehensively, unlike new car warranties that cover almost every imaginable repair cost for virtually every part of your car.  Vehicle components that are susceptible to wear and tear over time, such as tires, brakes and lights are usually always excluded from an extended warranty's coverage.  Be sure to check for exclusions when reading the fine print in your extended warranty contract.

Do I need an extended warranty?

If you're buying a new car, chances are it's already covered under a manufacturer's warranty which is included in the price of the vehicle.  If you're leasing and get a new car every two to three years, the manufacturer's warranty should be all the coverage you need.  When it comes to determining whether or not you need an extended warranty, keep in mind many of today's manufacturers offer comprehensive plans, with some programs lasting 10 years/100,000 miles.  As a general rule, it makes sense to purchase an extended warranty after your car hits 100,000 miles. This is usually the time when older cars begin to experience mechanical problems and are no longer covered by most warranty plans.  

If you opt to purchase an extended warranty, pick a plan that fits your budget and steer clear of high deductibles.  Finally, don't forget to check if the plan can be transferred to a new owner, if you decide to sell your car in the future.

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