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Are Extended Auto Warranties on Vehicles Worth the Extra Money?

Are Extended Auto Warranties on Vehicles Worth the Extra Money?

Whenever you buy a vehicle from a dealer, they inevitably try to add on to your purchase. One of those “add ons” is typically an extended warranty. They can seem like a good deal, and an extended warranty might save you some money when your car requires any repairs, but only if those repairs are included in the plan. Most people with extended auto warranties never really use them because of the certain and specific requirements it covers in the plan.

An extended warranty definitely becomes very significant for quick repairs when the manufacturer’s warranty period expires, but sometimes extended warranties offer higher price tags and necessarily do not cover everything. To decide whether a warranty plan is right for you or not, you should first look for the cost of extended warranties and what exactly they cover.

A Consumer Reports Survey declares that 55% of people bought the warranties along with their vehicles but never used it, and the rest 45% said they’d buy one again. Furthermore, people also said that the cost of the repairs was less than the cost of the warranty they bought.

In this article, we will describe what extended auto warranties really are and if they are worthy of your time and money.

What is an Extended Warranty?

An extended warranty is a service contract for the vehicle, which is optional for you to buy. It helps with the cost of certain repairs your vehicle might require at some point. It usually inaugurates after the manufacturer’s warranty expires.

An extended warranty might be very helpful in some places, it does not cover everything, such as the vehicle’s routine maintenance like oil changes, new brakes, or tires. The roadside assistance is also a separate expense.

“Sometimes the warranty a buyer purchases does not cover the same parts as the actual factory warranty, so one needs to be very careful regarding the coverage their plan offers.” says the auto buying concierge, Steve Roberts.

Pros and Cons of Getting an Extended Warranty

Most people choose to buy an extended warranty plan when they consider the misfortunes or accidents that may occur in the future and want to protect against unexpected costs of repairs. However, it is important to consider the pros and cons of it first.

Pros:

A benefit of an extended warranty is that it definitely saves money when your car needs a costly repair that the plan covers. The service provider will be responsible to pay for the bill of repairs. You’ll be only required to pay a certain amount of money (if needed or mentioned in the contract).

If you are someone who lives hand to mouth, then it is a good idea to get an extended auto warranty because it will provide you with peace of mind. You will not have to worry at night about paying for a repair the next day.

You could think of it like car insurance–the repairs get done without having to pay for the full amount.

Cons:

First, consider the fact that 55% of people never really use their warranty because of its conditions, which cover specific things and not everything. Another disadvantage is that you may not be allowed to have your car fixed at certain repair shops.


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by Harvey Carr // Harvey Carr is a contributor to Businessing Magazine.

Opinions expressed by contributors are their own.