Is Buying An Extended Car Warranty A Good Decision?
What is an extended car warranty? Sometimes being referred to as a vehicle service contract, vehicle protection plan, or extended auto warranty. These plans have assisted many drivers in covering vehicle repair costs that may not have been covered by their dealer or manufacturer warranty. However, an extended car warranty may not be ideal for everyone.
Taking extended car warranties at face value seems like a great idea. However, they are often expensive and do not cover all types of vehicle repair services.
Additionally, people who purchase extended warranties never enjoy their benefits in many circumstances, rendering the warranties as costs with zero financial gains. A recent Consumer Reports survey indicates that 55% of respondents said they bought an extended warranty that they did not use. Only 25% of the respondents in the study were likely to buy another extended warranty.
The same study showed that vehicle repair cost for participants who utilized their extended car warrant was often lower than buying the warranty.
What is our professional advice? Try a Vehicle Breakdown Protection plan from Breeze Protection – you can get approved online in seconds. What’s even better is vehicle service contracts start at a low fifteen dollars per month.
That said, we will show you how an extended car warranty functions, its costs, and the pros and cons of buying one. That way, we can help you determine if an extended warranty can help you before you buy one.
Worthy to note, as per federal law, an extended warranty is not a warranty and therefore has no consumer protections typical in other warranties.
Definition: What Is An Extended Car Warranty?
An extended warranty is an optional plan purchased to cover the costs of particular repair services your vehicle may require for the duration you will own the car. An extended warranty is activated upon the expiry of the manufacturer’s warranty. Also, your vehicle’s extended warranty and the manufacturer’s warranty may sometimes overlap.
Another critical point to note is that an extended warranty will not cover all types of repair costs for your car.
So, what costs are covered by extended car warranties?
Extended car warranties will not pay for routine maintenance services such as changing oil, tires, and brakes. Also, roadside assistance is almost always considered a separate service altogether – but not with Breeze – with Breeze Protection you have 24/7 roadside assistance included in your vehicle breakdown protection plan!
What is essential, carefully read the extended warranty’s agreement and its fine prints to know what an extended warranty does and does not cover before you commit.
What Is The Cost Of Extended Car Warranties?
Once you buy your car from the dealership, the dealer will likely inquire if you would like an extended warranty to go with your vehicle. Concurrently, you can expect dealers to increase the cost of extended warranties to realize a profit, just like they do with their financing plans.
It is always best to negotiate with the dealer for a lower price of an extended car warranty if you are focused on buying an extended warranty. Alternatively, consider purchasing an extended car warranty from an independent provider where the cost may be lower.
The cost you will pay for an extended car warranty depends on the services the warranty covers and your car’s make and model. However, you can expect to pay an upfront cost for the warranty of between $1,000 and $3,000 or higher. Note: if you decide to roll over the warranty cost into your car loan, you will pay interest on top of the cost of the warranty and other potential fees.
The other cost you may pay while the warranty subsists is a deductible. You can pay deductibles for every repair or every warranty service visit. Why is this important? Suppose you have a car problem that the repair professional cannot fix in a single trip? That way, you can end up paying two deductibles for a singular repair service; you need a deductibles payment plan that works for you.
Is An Extended Car Warranty Good For New Or Used Car?
If you are buying a new car, you may not have an immediate need for an extended warranty. The manufacturer warranty (usually included in the car price) will pay for most repair services, at least for the initial years when you own the car.
However, a used car from the dealer may not have a manufacturer’s warranty. Check for the Buyer’s Guide on the car window to establish whether the vehicle comes with a warranty. If it has a warranty, you may require to pay some fee to transfer it to your name.
Be ready to pay an extra fee to buy an extended warranty if you want additional coverage when purchasing a car whose manufacturer’s warranty has expired.
How Long Will The Manufacturer’s Warranty Last?
The simple answer is that it depends on the manufacturer. However, you can expect bumper-to-bumper warranties to last for three years or a distance of 36,000 miles, or whichever occurs first. On the other hand, powertrain warranties can go for as long as 60 months or 60,000 miles.
Are Extended Car Warranties Worth Their Price?
To realize the best value for your hard-earned money, carefully study both the pros and cons of an extended warranty plan before making a purchase. No matter how tempting an offer may seem for anyone looking for a program to cover their car’s unexpected repair costs, it is always best to consider the product’s suitability to your needs.
Pros For Extended Car Warranty
Provided the warranty covers the service, an extended car warranty can save you money whenever your car requires an expensive repair service. As long as the repair service is considered payable in the service contract, you will not pay the entire repair cost; you only pay for the deductible (if possible), and your warranty provider takes care of the rest.
An extended warranty will give you some peace of mind if you are overly concerned about how you will pay for a repair service for your car.
Cons For Extended Car Warranty
When considering if an extended warranty is good for you, please consider some of these drawbacks also:
- Usage: A majority of people who buy an extended car warranty never get to use it. Also, in most cases, whenever they use the warranty, the cost of the repair services is lower than the cost of the warranty.
- Overlap: You are likely to end up paying for the repair service you are getting for free when the coverage periods for the manufacturer’s warranty and the extended warranty overlap. Also, if you buy a new car, the extended warranty will remain inactive until the expiry of the manufacturer’s warranty.
- Coverage: The number of repair costs covered by extended warranties is limited. Carefully read the agreement’s fine print to understand what the warranty covers and does not cover. That way, you will not be blindsided by a car repair bill you had expected to be paid by the warranty provider.
- Service requirements: Another drawback is that you may be limited to specific facilities where your car can be repaired. Where the quality of the service may not be guaranteed.
- Depreciation clauses: Some extended car warranties may pay a portion of the repair costs based on your car’s mileage. Such depreciation clauses also apply to the cost of replacing faulty parts in your vehicle.
- Reliability: Some parties that pay for repairs under extended warranties are car dealers, manufacturers, and independent third parties. The efficiency and reliability of the extended warranty in meeting your repair bills depend on these entities’ survival. If the institution that should pay the bill goes bankrupt, you will be left with a warranty without any value.
An extended warranty has the potential of increasing the purchase price of a car to the tune of thousands of dollars. Initially, it may seem like a bit of expense if you choose to finance it and roll over the warranty cost into a monthly fee. However, it is a significant amount of money even when it is not all paid upfront.
If you purchase a vehicle in sound condition based on its track record, you do not have to buy a warranty. It is best to save the money you would have spent on the warranty and use it when the car needs repair or replacement of parts. If you can somehow maintain your vehicle in perfect condition, you may use the saved money for other uses.
You will have to decide if the peace of mind brought about by an extended warranty is worth the cost of the warranty. If you have an extended warranty, ensure you conduct due diligence to only work with a trustworthy company and avoid falling for auto-warranty scams.
Breeze Protection is the Superior Extended Car Warranty
For all of these reasons, and still some more, we aligned our mission with providing unmatchable vehicle breakdown coverage and mechanical breakdown repair. With Breeze Protection, you will receive comprehensive coverage that will protect your vehicle from much more than your standard dealer warranty. You can find more information about our comprehensive vehicle breakdown protection on our website and get a free quote in under 30 seconds using our online tool. Within minutes, you can gift yourself the peace of mind you deserve knowing that Breeze has you covered no matter the accident or emergency.