There are pros and cons to purchasing an extended warranty for new or used cars. The first thing you need to look at is what kind of coverage the vehicle currently has, before deciding if an extended warranty is worth the money.
Warranties for New or Used Vehicles
When it comes to service contracts (sometimes called extended warranties), there are often several choices of coverage options that can impact the price, so it’s important to weigh the pros and cons of an extended warranty before you sign anything. Don’t be afraid to ask questions to make sure that you’re getting what you’re paying for.
One of the first things to determine is what kind of manufacturer warranty is already covering the vehicle. If you’re buying new, or certified pre-owned, there’s almost always some sort of coverage – such as powertrain or bumper to bumper – which is in place on the car. It doesn’t make sense to pay for an extended powertrain warranty which lasts three years and 60,000 miles if the vehicle already carries a 10-year/100,000-mile warranty for the same systems.
Pros and Cons of Extended Warranty Coverage
Let’s look at some of the perks of extended warranties:
- It’s easy – Dealerships often offer extended warranties when you buy a car. It adds to your overall cost, but the dealer takes care of the paperwork, and typically sets up your payments. Plus, you can usually take your vehicle right to the dealership if it needs repairs that are covered. If the dealer is franchised, offered coverage is sometimes manufacturer-based, which means they’ll use original equipment manufactured parts for repairs.
- Custom coverage – In some cases, you can customize your coverage to the type of warranty you need. Be sure you understand any typical problems about the car you’re getting, and get the coverage you need based on known potential issues with your vehicle.
- Peace of mind – Because you never know with cars, getting an extended warranty can give you the peace of mind you need to know that your vehicle can be repaired should it need it. Though no one ever wants to have to use their coverage, it can really make a difference, especially if the repair requires a specialty part, computer, or electronics – which can get costly.
However, there’s no guarantee that you’ll ever need to use the extended warranty you purchased. This means you could be looking at an expense that’s not worth the cost. Here are some cons to consider before buying an extended warranty:
- Cars last longer – These days, vehicles are manufactured to stay on the road, and stay in good condition, often for 10 years or more. This increased reliability could leave you wondering why you bothered to purchase coverage you may never use.
- Increased financing cost – Adding the cost of an extended warranty to your car loan may be recommended by a salesperson, but you’re also adding to the amount financed. In addition, you typically have until the manufacturer warranty coverage expires to purchase an extended warranty.
- Some repairs aren’t covered – Buyers sometimes assume that getting an extended warranty means that everything is covered, no matter the repair. This is rarely the case. When you purchase an extended warranty, make sure to look at the exclusion list, which details what’s not covered.
The only person who can say for sure if the pros outweigh the cons of extended warranty coverage is you. Every car buying situation is different, and coverage and extended warranty prices vary.
Getting a Car before Worrying about Warranty Coverage
If you’re in need of a vehicle, whether new or used, but worry that your credit situation will leave you out in the cold, don’t fret. Here at SLG Progressive + Commercial Insurance Agency, we know how to help you take the stress out of finding the right financing.
We work with a nationwide network of special finance dealers that have the lenders available to help you get the financing you need. Bad credit, no credit, and even bankruptcies can be overcome! Once you’ve got the loan, you can discuss your extended warranty coverage options with your salesperson. All you have to do to get the process started is fill out our online, no-obligation auto loan request form today!