Essential factors to be aware of before buying an extended car warranty
An extended car warranty is a form of a service contract that covers auto repairs after the manufacturer’s original warranty runs out. The coverage varies across plans. However, typically, they don’t include upkeep for the wear-and-tear and the standard maintenance items like the tires, the air cleaners, the brake pads, or oil changes. Getting an extended car warranty remains a hot topic of debate, as around 55% of the consumers who buy this plan never end up using it. Clearly, this staggering percentage implies that there’s a good chance this expensive plan might not come in handy after all. So, before one gets an extended warranty, there are some key considerations to be made. Continue reading to find out if purchasing an extended car warranty is a right decision for you or not.
Who should buy an extended car warranty?
An extended car warranty is not the best choice for every driver. Therefore, one should only get it when-
- they are planning to use the car for 5 years or longer; and/or
- they are buying a used car.
Almost every car dealership one visits will offer an extended car warranty offer. It is essential to know that the choice is completely up to the buyer. If a dealer tells the prospective buyer that they are not eligible for financing without an extended car warranty then it is safer to switch to another dealer.
What factors to consider before getting an extended car warranty?
Before one goes ahead with the plan of getting an extended car warranty, there are some aspects that should be scrutinized. They are as follows:
- Original warranty– To understand if one genuinely needs to get an extended car warranty, he/she should examine the original warranty, its duration, and what it covers. For example, if the new car comes with a factory warranty of 36,000 miles or 3 years and one intends to keep the car for just 2 or 3 years, then an extended warranty might not be the best option. On the other hand, buying an extended car warranty makes much more sense, if one has acquired a used car with an expired warranty or one that is close to the expiration of the original factory warranty. Likewise, it is practical to purchase an extended car warranty if one plans to keep using the vehicle until it wears out completely.
- Coverage elements– Typically, extended car warranties don’t comprise routine maintenance and repairs or replacement of parts that can commonly get worn out. Therefore, one should ensure to peruse through the contract so that the pros and cons can be weighed smartly.
- Warranty cancellation– One should verify if the state laws permit the cancellation of the warranty after signing. If the state auto law grants one the option to withdraw from the extended car warranty, then they can apply for a refund. Similarly, if the warranty is packaged with the auto loan, the principal amount will automatically be adjusted for reducing the number of installments.
How to buy an extended car warranty?
One can purchase an extended car warranty using the following ways:
- One doesn’t have to buy an extended car warranty while purchasing a car. It can wait until the factory warranty terminates. Settling for this option will work best, especially, if one is unsure about investing in an extended car warranty.
- If one is taking an auto loan and are certain about having an extended car warranty, it can be bundled with an individual’s auto financing plan so that the payments for it don’t have to be made separately.
What determines the cost of an extended car warranty?
The following are some important determinants that help figure out the final cost of an extended car warranty:
- The type of car
- The model and year of manufacture of the car
- The driving habits of the driver
- Type of car usage in terms of terrain and miles
The approximate cost of extended car warranty can fall anywhere between $1200 and $3000.
Tags – extended car warranty, car warranties, car extended warranties