How to Buy an Extended Car Warranty

Learning how to buy an extended car warranty is important. A warranty is like insurance. You are buying peace of mind to avoid costly surprises. However, you have to decide if buying one makes sense given your own unique situation.

Steps

  1. Image titled Buy an Extended Car Warranty Step 1
    1
    Determine how much risk you are prepared to assume by assessing the risk and potential cost of major breakdowns.
  2. Image titled Buy an Extended Car Warranty Step 2
    2
    Evaluate whether an extended car warranty can increase the resale value of the vehicle.
  3. Image titled Buy an Extended Car Warranty Step 3
    3
    Estimate the cost of repairs without the warranty and compare to the cost of the warranty over the period of the coverage.
  4. Image titled Buy an Extended Car Warranty Step 4
    4
    Evaluate your average annual mileage against the manufacturer's basic warranty and determine if an extension is really needed and/or required.
  5. Image titled Buy an Extended Car Warranty Step 5
    5
    Evaluate your ability to minimize repair costs. If you are a do-it-yourself person, you may not really benefit from an extended warranty.
  6. Image titled Buy an Extended Car Warranty Step 6
    6
    Determine if there are any hidden warranties covering the vehicle. Occasionally manufacturers will make exceptions in their warranties to cover special problems or defects with their products (like the engine).
  7. Image titled Buy an Extended Car Warranty Step 7
    7
    Consider who is providing the extended car warranty, the dealer, manufacturer or some other company? A reliable coverage should be maintained by a financially sound reputable company, maintaining appropriate reserves to cover future risks.

Tips

  • Check if the warranty covers both breakdown and wear & tear failures.
  • Check if the plan has a deductible per part repaired (motor, transmission, radiator, etc) versus per single repair visit.
  • See if the plan contains restrictions on the repair facility you can use. Some extended car warranty programs, particularly those maintained by dealers, force you to go their repair shop.

Sources and Citations

Article Info

Categories: Buying and Selling Cars