Extended Warranties for Used Cars
Know what an extended warranty is and whether or not you need one
Extended Warranty OverviewAn extended warranty is a contract that protects car owners from mechanical failures and breakdowns after the original manufacturer's warranty expires.
Different Types of Extended WarrantiesThere are two common types of extended warranties — those offered by manufacturers and those offered by independent, third party companies.
Extended warranties offered by manufacturers are plans that are extended past the car's original warranty. Manufacturer extended warranties cover the cost of repairs and service at dealerships after the time the original new car warranty expires.
Independent extended warranties are typically offered by third party organizations or insurance carriers. Not only do independent extended warranties cover dealership repairs and service, they usually allow for repairs at independent service stations too.
Deciding if you need an Extended WarrantyIf your used car is currently covered under a warranty, such as a certified pre-owned car (CPO) that typically comes with a guarantee, chances are you don't need duplicate coverage.
If your used car isn't equipped with lots of options or advanced technologies, chances are you don't need an extended warranty either. The more advanced features your car has, the higher the likelihood something could break and the higher the repair expense.
It's smart to check the reliability ratings for your car also. If your car rates high in reliability, the less likely it will need unexpected or costly repairs.
As a general rule, it makes sense to purchase an extended warranty after your used 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.
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 used car.
What are the disadvantages of extended warranties?Extended warranties fall short when it comes to covering a vehicle comprehensively, unlike bumper to bumper new car warranties. 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.
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