A new car extended warranty costs money up front, but it may save you thousands in the long run. But it’s not for everyone. Purchasing a warranty is an expensive investment, and it’s one that you should consider carefully before you decide to buy.
The first question you need to ask yourself is: “Do I really need a new car extended warranty?” It’s important to understand that the purpose of an extended vehicle service contract (often called an auto protection plan or mechanical breakdown insurance) is to provide financial protection in case of an expensive repair. Generally, the warranty will cover the cost of parts and labor for up to a certain number of years or miles after the manufacturer’s original warranty expires.
Extended warranties are also available from third parties and dealerships, but you should beware of overpriced plans sold by dealerships. It is best to shop around and compare prices, either online or at other dealerships. Many dealerships will try to upsell the warranty to make more profit, but you should know what the fair price is before you walk into a dealer.
Most manufacturers offer their own versions of extended vehicle service contracts, but they’re usually much more expensive than those from third parties. In addition, you’ll likely be limited to where you can get the repairs done. In other words, you’ll only be able to use the factory-approved mechanics that work for the company that offers the extended warranty.
What do the plans actually cover?
The details of a new car extended warranty vary, but in general, they will include coverage for major systems like the engine, transmission and powertrain. Most will also include bumper-to-bumper coverage, including electrical and suspension components. In addition, most extended warranty plans will cover roadside services and rental car reimbursement. Some will even cover specific items, such as the battery for an electric car.
Lastly, most extended warranty plans have a waiting period before they take effect. This allows the provider to inspect and verify that the vehicle has no pre-existing problems. It’s important to note that most extended warranties don’t include routine maintenance, so it’s a good idea to schedule regular oil changes and other preventative maintenance.
Ultimately, the decision to purchase an extended car warranty will depend on your financial situation and the amount of time and mileage you expect to put on your new or used vehicle. For many people, a new car extended warranty provides peace of mind and financial protection. For others, however, it’s a waste of money that could be better spent on other investments or savings for unexpected expenses.