An extended car warranty can provide peace of mind to car shoppers who worry about the cost of repairs after their manufacturer’s warranty expires. It’s similar to auto insurance, which is mandatory in many states and helps ensure drivers are covered should the unexpected happen.
However, it’s important to know that not all warranties are created equal. Some are much more expensive than others and don’t necessarily cover the same items. That’s why it’s essential to shop around for the best price on a vehicle service contract and read the fine print carefully before signing anything.
Most of the time, when you buy a new or used car, it comes with a factory-provided warranty to guarantee quality and help cover repair costs for the first few years of ownership. After that, it’s up to you to pay for any maintenance or repairs that come up. That’s why an extended car warranty can be a smart investment, especially for older or higher-mileage vehicles.
There are several different types of extended auto warranties, but the most popular are bumper-to-bumper coverage plans. These types of policies typically include most of the car’s major components and often have a $100 deductible. They also cover roadside assistance and other perks, such as rental car reimbursement.
Other options include a mechanical breakdown plan, which covers specific parts of the vehicle, including the engine, transmission and other mechanical systems. These policies are usually cheaper than bumper-to-bumper plans, but they may not be as comprehensive and may not cover the same types of repair work.
A third type of warranty is a wear-and-tear policy, which is designed to help pay for parts that break down due to normal use. It’s typically less costly than a bumper-to-bumper plan and covers everything from the tires to the air conditioning unit. The only catch is that it typically excludes wear and tear items such as windshield wiper blades, brake pads and shock absorbers.
Some extended warranty providers offer a variety of payment structures, with consumers able to pay upfront, through a monthly payment plan or incorporate it into their car’s financing. As competition amongst third-party providers increases, so does the level of transparency regarding the terms of each plan. Consumers should look for a clear breakdown of each coverage option, as well as a list of exclusions and service requirements.
The best way to save money on an extended warranty is to buy it before your original factory warranty expires. It’s also a good idea to consider one with a lower deductible, which can lower your overall premium cost. The more you spend on a warranty, the more you’ll likely pay in the long run.
When looking for an extended warranty, it’s important to choose a company that has a good reputation in the industry and provides transparency in its contracts. Buyers should check for reviews and financial stability ratings, as well as a good track record with the Better Business Bureau.