Also known as a vehicle service contract, an extended warranty is triggered once the manufacturer’s warranty expires. For starters, this is an optional plan that helps you cover the cost of certain vehicle repairs.
If you plan on keeping your car well beyond the factory’s warranty expiration date, we recommend getting an extended warranty. It will help you save money on repairs, and also increase your vehicle’s appeal when you want to sell it.
There are several benefits of purchasing this optional protection plan, including:
- Repair coverage
- Roadside assistance
- Rental car reimbursement
Please note that most extended warranties do not cover “wear and tear” items including oil changes, belts, and brake pads. Read on to find what an extended warranty does and doesn’t cover and what to consider before signing the agreement.
Should I buy an extended warranty for my car?
Well, it depends. For example, if you buy a car that the manufacturer’s warranty no longer covers, an extended warranty can be a great investment. But this doesn’t mean this warranty is for everyone.
In a recent survey, Consumer Reports found that 55% of car owners who purchased this warranty never used it. But that’s not all. More than half of them said they would never get one again in the future.
The following are five key questions to ask when deciding whether an extended warranty is right for you or not.
When do you need additional coverage for your vehicle?
If buying a new car, you might not require an extended warranty until the original warranty expires. Should you want additional cover, check whether the factory warranty covers some items in the latter.
Manufacturers who offer longer warranties may not need to add another cover since the factory warranty is more likely to suffice for standard repairs. If the coverage period of your extended warranty overlaps with the vehicle service contract, you may be paying for what you are already getting. In most cases, you should buy an extended warranty only when the dealer’s warranty expires to avoid gaps.
Who backs the service contract? Are they reliable?
If you decide to get additional cover, find out who pays for the contract under the terms of service. It could be the dealer, manufacturer, or a third party company. Most service contracts are handled by an administrator company that gives green light for the payment of claims to any dealer under the contract. If the entity that carries out the repairs goes out of business, you may be left with a useless warranty.
What does the claim process entail?
Different companies provide varied claim processes for their extended warranty. Some will ask you to complete multiple procedures before approving your claim. Ensure that the company you choose offers a fair and simple process.
Will my mechanic accept the payment through the warranty?
Even if you sign up for the best extended warranty, it might not be any good if your local mechanics will not work with it. To be on the safe side, ask your mechanic whether they work with the warranty you intend to get. Some of these warranties offer a reimbursement option for areas where mechanics are less likely to use car warranties. Others will require you to have your repairs at certain facilities.
Does the extended warranty outweigh the costs?
While it’s almost impossible to estimate the cost of the repairs you will require, looking at the most expensive repairs under warranty can help you decide whether an extended warranty is a good option. What would an engine or a head gasket replacement need? Compare that with how much the plan offers per year with the deductibles required.
Extended warranties for new cars
If you bought a brand new car, you know its maintenance and what kind of repairs you’re likely to face. But if you still insist on getting an extended warranty for a new car, you want to be sure about the policy’s type of coverage. Some policies may allow the manufacturer to sell a new car warranty after the original warranty expiration. Do some research to know whether a third party warranty has a better deal than what the original one offers.
Keep in mind that service contracts cover a long list of parts, some which your factory warranty encompasses.
But what happens if the repairs are not covered in the manufacturer’s warranty? In that case, it’s upon you to follow up on the pre-approval claims process and verify that your extended warranty includes these repairs.
Extended warranties for used cars
When buying a used car, it can be tough to tell exactly the condition of its mechanical parts. In this case, getting an extended warranty makes a lot of sense especially for cars with over 100,000 miles.
Besides, an extended warranty is designed for any used car whose manufacturer’s policy is already out. In this case, getting your service requires following the claim process by calling your claims line and having your repair verified. The repairs may need a pre-approval by the mechanic to ascertain the cause and type of problem to the policy administrator.
As with most plans, your policy will require that all manufacturers’ maintenance guidelines be completed on time. Check to see whether the previous owner followed these guidelines to avoid being denied claims later on.
So, is buying an extended warranty a good idea?
If you’re contemplating buying an extended warranty for your new or used car, start by weighing the approximate cost of expected repairs against the plan coverage. Besides, ask whether the warranty can be transferred to another person as this adds value to your vehicle. Most importantly, keep your maintenance records safe as they might be needed when making your claims.
Do you have any further questions that you’d like us to address on extended warranty? Please contact us here at Motors on Wheels and we’ll be happy to help! All our used cars qualify for extended warranties due to our rigorous multi-point inspection process.