An extended warranty car is a car that has been purchased with a service contract to help cover repair costs after the manufacturer’s original vehicle warranty expires. These warranties are available from a variety of third-party providers, including auto clubs and insurance companies. The contracts vary in length, what’s covered and cost.
Purchasing an extended warranty isn’t necessarily a bad idea, but there are some things to keep in mind. For example, the cost of an extended warranty can be significant. Moreover, many people who purchase an extended warranty end up never using it. This article isn’t designed to tell you whether or not buying a warranty is a good idea; it’s intended to help you better understand the options that are available.
The cost of an extended warranty varies by provider, vehicle type and coverage level. Generally, bumper-to-bumper and powertrain warranties are more expensive than basic plans that only cover the engine, transmission and drivetrain. A deductible is also typically included, and this can be anywhere from $0 to $200. Depending on the contract, a repair shop will run diagnostics to determine what’s wrong with your car. If repairs are needed, the repair shop will contact your warranty company for authorization.
Repairs will be made by a certified technician at the repair shop or dealership. The repair shop will then submit the claim to the warranty company for reimbursement. Some companies allow you to file a claim online, while others require you to call customer service to make the request.
It’s important to be aware that most extended warranties do not include parts such as the battery, oil, wipers and tires. Also, some of these warranties have a depreciation clause, meaning they only pay for a percentage of the cost of repair after a certain amount of time has passed. Additionally, some extended warranties only cover the vehicle when it’s being driven by the owner. Those who are unsure whether an extended warranty is worth the investment may want to talk with a trusted mechanic or advisor to get their opinion.
Overall, an extended warranty isn’t necessarily advisable unless you have no other option for addressing costly repairs. If you’re not comfortable spending that much money on an extra policy, it might be more prudent to set aside money in a savings account for future repair costs instead. Then, if you need to use the money for something else, you can withdraw it without worrying about having to spend additional money on an extension that you’ll likely never benefit from. That’s why it’s always a good idea to research providers, read the fine print and compare prices to ensure that you’re getting the most value for your money.