Car extended warranties can reduce financial stress for some drivers. But it’s important to understand what they really cost and cover before deciding whether to buy one.
You’ll want to know if your warranty is backed by the manufacturer or an independent third party. Also, find out where you can get repairs done and the company’s customer service reputation.
Cost
Purchasing a car extended warranty is an option for vehicle owners who need extra protection after their manufacturer’s warranties expire. These warranties, also known as vehicle service contracts (VSCs) or mechanical breakdown insurance (MBI), are typically available from the dealership and third party companies. They can be costly and may restrict repair options.
The cost of an extended warranty varies by coverage, deductibles and length of contract. A longer-term contract will generally be more expensive than a shorter one. Also, a bumper-to-bumper warranty will likely cost more than basic powertrain coverage.
Whether to purchase a warranty depends on the vehicle owner’s financial situation, goals and priorities. It’s also important to review the car warranty company’s track record and history of paying claims. In addition, it’s worth considering how the warranty can be canceled later in case of buyers’ remorse or other issues. The warranty company should be transparent about its pricing structure. A good way to do this is to compare quotes from multiple providers.
Coverage
Many people don’t realize it, but car warranty companies make a profit on the warranties they sell. That’s not to say they charge too much or that they’re scamming anyone, but it is important to consider when researching different plans.
One major factor in the cost of an extended warranty is its level and length of coverage. Bumper-to-bumper plans that include exclusionary coverage can be the most expensive, while stated-component warranties with limited but specific coverage tend to be cheaper.
When evaluating the coverage offered by a plan, it’s also important to look at whether a deductible will be required and how claims are handled. Some companies will reimburse you for repairs directly, while others require that you pay up front and will then cover the repair costs later on. Another factor to consider is if the policy can be transferred to a new owner in case you decide to sell your car. Many manufacturers offer extended warranties on their vehicles.
Deductibles
When considering an extended warranty for your car, be sure to consider the deductibles associated with it. Deductibles are typically charged per service visit or repair, and can be either one-time or recurring. You should also read the contract terms carefully to make sure you understand what is covered and what is not. For example, most warranties will not cover repairs that result from commercial use of the vehicle or aftermarket parts. Additionally, some warranties will exclude rust corrosion caused by sand, salt, and tree sap.
You should compare prices between several different providers to find the best car extended warranty for your vehicle. Look for a provider that offers a wide variety of plans and has a reputation for customer service. Some companies may even offer a free sample contract. A good extended warranty company will also provide perks like roadside assistance and rental car reimbursement. Other perks may include trip interruption insurance, which reimburses you up to $1,500 for expenses incurred while driving your vehicle.
Claims
Regardless of which warranty you choose, carefully read the fine print. You’ll want to know how long the coverage lasts, whether the plan has a mileage limit or car age limit, and which repair shops are on-board.
A reputable provider will offer customer reviews and ratings. If you find any complaints, they should be addressed.
It’s also a good idea to keep all documentation from your mechanic, as well as any communications with the warranty administrator. This will be useful if your claim is denied. Some companies even have a phone number dedicated to claims, which should help reduce your stress. In the rare case that your claim is denied, it’s a good idea to get a written reason for the denial. This will be helpful if you ever decide to take the company to court for bad service. This is especially important if the extended warranty was sold at the dealership or bundled into an auto loan.
