Should You Get an Extended Car Warranty?
Unless you own a car workshop or call yourself a DIY junkie, at some point, you must have considered getting an extended warranty for your car. But with so many options and misconceptions around this topic, it is hard to come to a consensus. So here’s a simple guide to explain whether or not you should invest in an extended warranty program or not.
What is an Extended Warranty
An extended warranty is a service contract between a customer and a warranty provider that covers a range of repairs after the manufacturer’s warranty is over. The coverage of an extended warranty program usually begins after the expiry of the manufacturer’s factory warranty program. A typical Extended Warranty program covers repair and replacement costs of electrical and mechanical components, which in some cases include problem areas not covered by the manufacturer. A warranty program can last anywhere from one to eight years and most manufacturers offer in-house extended warranty programs while you purchase your vehicle. Both third-party and manufacturer warranty programs start from as low as $1000 and pre-repair deductibles reach as high as $100.
Do I need an Extended Warranty?
Warranty coverage can come in handy if you don’t want to spend money later or choose to purchase a vehicle that costs higher than usual to run and maintain. In cases of affordable and reliable cars, the warranties might not be as useful especially if you walk around with enough savings to cover occasional repair bills. Before buying an extended warranty make sure you evaluate providers based on cost, coverage, and convenience. Also, don’t forget to compare policies and negotiate to get the best possible deal.
How Much Does an Extended Warranty Cost?
There’s no single answer to this question. Similar to life insurance, there are a number f factors such as age, risk, amount of cover, etc. that apply to an extended warranty program and as a result, the prices can range anywhere from a few hundred dollars to over a thousand per annum. Here are the factors that determine how much an extended warranty program costs:
- Age of the vehicle
- Mileage of the vehicle
- Buying from a dealership versus a third-party provider
- Vehicle year, make, and model
- Level of coverage
- Number of high-tech components in the vehicle
- Driving habits and routine vehicle maintenance
- Deductible set
What are Deductibles in an Extended Warranty?
The subject of Deductibles is yet another perplexing topic. A deductible in an extended car warranty is the money that you will have to pay before the warranty provider settles the claim amount just like with any insurance policy. However unlike an insurance policy which requires you to pay hefty deductibles, in the case of an extended car warranty that amount will mostly lie between $50 and $100 depending on the kind of plan you purchase and some plans, especially some of the programs offered by the manufacturer/dealerships can be availed with a $0 deductible fee, at a higher rate of course. So always read the terms and conditions and stay aware of these details to prevent any form of exploitation.
For example, after a repair job, if your bill comes up to say $1000 and your deductible according to your extended warranty is $50, then at the time of settlement, your warranty provider will reimburse you a sum of $950.
Manufacturer Extended Warrant vs. Third-Party Extended Warranty
All established auto manufacturers offer extended warranty programs and they insist their plans to be the best suited for the vehicle and promise to offer a hassle-free experience when you do run into a problem. They can also be added at the time of purchase making it the least cumbersome option when it comes to extended warranties however you will end up paying interest on it if you go for any form of financing at the time of purchase. So consider a manufacturer plan in cases where you plan to pay for your car upfront.
Third-party warranty providers just like any other policy tend to make their plans more attractive, at least on paper, by offering added benefits such as the convenience of choosing your preferred repair shop, affordable plans with flexible payment options, the ability to opt-in even after the manufacturer’s factory warranty runs and more which isn’t something that a manufacturer cannot match by design. However, processing claims and tying up with your local repair shops might not be as seamless an experience as the one offered by a dealership. So consider a third-party warranty only after studying the claim process and speak to your nearest repair shop for the best possible results.
|Increased Total Cost||Dealerships offer extended warranties with a high retail markup.|
|A warranty that costs $800, for example, might cost $2,500 from a dealership.|
|Hidden Interest||In addition to being more expensive up front, a dealership extended warranty often involves rolling the cost into your vehicle financing. This might seem like a convenient way to pay for your warranty, but unfortunately, you’re also going to be paying interest. This could add potentially hundreds of dollars to the cost of your extended warranty over the life of your auto loan.|
|Limited Repair Shops||An extended warranty from a dealer requires you to have covered repairs completed by the dealership. You may be able to go to another dealer of the same automaker, but this still greatly limits your repair options – for example, if you don’t live close to a dealership and experience a breakdown.|
|Limited Coverage Options||Most dealership extended car warranties are limited in plan options. Generally, your coverage choices include a comprehensive plan, an intermediate plan, and a basic powertrain plan.|
|Vehicle Restrictions||You’re not going to be able to get a dealership extended auto warranty on an older vehicle or one with higher miles. Sometimes, dealerships don’t offer extended warranties once the manufacturer’s warranty expires. This means you probably can’t protect your car with 100,000 miles using a vehicle service contract from a dealership.|
Top Extended Warranty Providers
Uproar is based out of Seattle, Washington, but it’s not like any other extended car warranty company out there. Uproar bills itself as an innovator, which makes a lot of sense considering it’s the first extended warranty company to offer a 100-percent digital, subscription-based experience. The main highlights of uproar include an instant quote and signup online, same-day coverage, no long-term commitments, transparency, and no aggressive salespeople or robocalls. They are BBB accredited and have five-star ratings from both Google and Consumer Affairs.
Endurance offers Coverage for cars up to 20 years old which makes it ideal for used car owners. They offer hassle-free inspection after which the claim can be filed, making the entire process foolproof and they aim to ensure that you don’t miss minor details which might cause you trouble in the future. They also offer membership benefits which add to the whole customer experience and help them secure the top spot.
Another established player with over two decades of experience, CARCHEX offers coverage for cars with up to 250,000 miles which makes them a great choice for people who plan to purchase a warranty for their heavily used vehicles. They offer a wide range of policies some of which offer industry-leading claim filing processes. With an A+ rating from the Better Business Bureau, CARCHEX should be on your list when shopping for an extended warranty.
Protect My Car is one of the top consumer-rated warranty providers in the business backed by high BBB. They offer combo plans that include maintenance packages along with the added warranty and even go the extra mile by offering services like Oil changes and tire rotation for added convenience. Coverage for older vehicles and long-term payment options are other highlights that make Protect My Car one of our top picks.
Are Extended Warranties worth it?
All new cars come with a manufacturer’s warranty, however, they don’t cover repairs of all types for instance electrical components or failure with wiring aren’t always covered because a basic manufacturer warranty is designed to cover only basic mechanical components which usually include engine and transmission. This is where extended auto warranty services come in as the savior. Designed to cater to such scenarios and offer coverage for complex components extended warranty programs, both manufacturer and the third party, offer added peace of mind and come with a range of benefits. You might never need one, but as the age-old saying goes, better safe than sorry, and an extended warranty is the safer option.