Extended Warranties For Cars – What You Need to Know

A lot of car buyers dread thinking about paying for costly repairs, which is why an extended warranty for your car may seem like a good idea. It limits your financial risk for a certain period of time, but it can also be expensive and may cover only specific repairs or parts. And, according to a Consumer Reports member survey, many people who buy these warranties end up spending more for the coverage than they get back in direct benefits.

Car warranties are available from dealerships, auto clubs and insurance companies (which offer them as mechanical breakdown coverage). They vary in terms of duration, what they cover and price. Some even include roadside assistance and rental car reimbursement, but you’ll need to look carefully at the fine print.

You’ll likely find the best deal by purchasing a plan directly from the manufacturer of your car, rather than through third-party providers. However, this can add up to a significant sum upfront — and it’s important to make sure the plan is a worthwhile investment before you sign on the dotted line.

Unless you’re financing your car and rolling the cost of the warranty into your loan, you should expect to pay for the warranty in one lump sum up front or through monthly payments. The money you save by not buying a warranty could be put toward a cash down payment on your next car or to help pay for unexpected repair bills down the road.

You may be better off without an extended warranty if you drive a new or low-mile used vehicle that’s known for reliability, according to Kelly Blue Book and Edmunds. You can also reduce your stress by creating an emergency fund to cover the cost of repairs or by putting the money you would have spent on a warranty into a savings account that you can use for other needs.

The biggest drawback of an extended warranty is that you’re paying for peace of mind. If you’re worried about your vehicle breaking down and don’t have the budget to repair it, a warranty can give you some security.

What you need to know about extended warranties

The main issue with extended warranties is that the car repairs that are covered are typically expected to happen a lot later than the warranty expires. And, when the warranties do run out, you’ll still be responsible for the deductible and any other parts not covered by the contract.

Another problem with extended warranties is that they often limit your ability to choose where you can take your vehicle for repairs. Some warranty companies will only let you use approved service centers or will require that you get pre-authorization for any work. This can be stressful and inconvenient if you need your car repaired quickly. Lastly, the cost of an extended warranty can be high and you might never actually use it. If this is the case, it’s likely not worth the extra expense. extended warranty for car

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