Extended car warranties are designed to help you cover the cost of vehicle repairs beyond the standard vehicle warranty offered by the manufacturer. While extended warranties are a great idea in general, it may be better for some people than others. It’s also not uncommon for individuals to fail to understand what extended warranties are, how they work, and whether it’s the right option for them.
In fact, one survey from Consumer Reports found that 55% of the people purchased extended warranties didn’t end up using them. On the other hand, the last thing you’d want is to run into a situation where costly repairs exceed what you would have spent on extending your warranty. Everyone has a unique situation, and gathering more information will help you make better decisions. Here’s what you need to know:
Understanding Extended Warranties
As previously mentioned, extended warranties cover the cost of vehicle repairs while you still own the car. Typically, this type of warranty begins as soon as the manufacturer warranty ends, but in some cases, the two may overlap. It’s important for you to conduct your own research and choose a warranty that best fits your vehicle. For example, as a luxury car owner, you might look into the best Mercedes extended warranty options.
However, one of the most important decisions you’ll have to make is knowing what type of repairs are included in the warranty, because not all warranties cover all types of repairs. For instance, some warranties don’t cover certain parts of the vehicle that may have been included in the original manufacturer warranty. Routine maintenance such as oil changes may not be included either, and roadside assistance is typically an additional cost.
Like any investment, analyzing the fine print is of the utmost importance. Pay close attention to the type of coverage you’re getting under this warranty, particularly if you have a new car, as your extended warranty doesn’t begin until your manufacturer warranty expires. You’ll also want to pay close attention to service requirements and depreciation clauses.
Is an Extended Warranty Right for You?
The most obvious benefit of an extended warranty is that it can protect you against unforeseen costs. This can offer you peace of mind, knowing that your vehicle is insured in the event of an emergency. Just like car insurance, no one likes to pay for it, but you’ll certainly appreciate it in the event that you need it. Think about your ability to pay for certain expenses out of pocket; if you aren’t comfortable with that risk, an extended warranty is likely right for you.
Types of Manufacturer Warranties
Warranties differ depending on whether you’re purchasing a new or used car. If you’re purchasing a new car, chances are you won’t need an extended warranty right away. Typically, car dealers will cover bumper-to-bumper warranties that are good for three years or 36,000 miles. Under this type of warranty, everything from the front bumper to the back bumper is covered, but wear and tear items, like brake pads or windshield wipers, are not.
Other types of manufacturer warranties include powertrain warranties and corrosion warranties. Powertrain warranties cover mechanical parts of the vehicle, such as the transmission and engine, and often have a longer coverage period than bumper to bumper, starting from 5 years and 60,000 miles to 10 years and 100,000 miles. Lastly, some manufactures offer a lifetime protection of the corrosion of the vehicle’s metal.
Cost of Extended Warranties
Finally, one of the most important factors when considering whether an extended warranty is right for you is cost. Typically, you can expect to pay between $1,000 and $3,000, however, in some cases—depending on the type of car you own—it may go up even more. If you’re using an auto loan to pay for your warranty, then you’ll likely pay interest fees on it as well.
And lastly, your total cost may include a deductible, and how that deductible is paid depends on your terms of the agreement. Some deductible plans may end up costing more than others. For example, if your deductible is based on service visits and you have a repair that requires multiple visits, you could end up paying much more than you thought.
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