Extended Warranties – Is it Worth Buying an Extended Warranty on a New Car?

If you’re thinking about buying a new car and are considering whether or not an extended warranty is worth it, the answer depends on your driving habits and vehicle choices. In general, however, these supplemental protection plans are ideal for buyers who expect to keep and drive their vehicles past the manufacturer’s initial warranty coverage periods.

In addition to providing peace of mind, these plans typically pay for parts and labor for covered repairs, leaving the vehicle owner responsible only for their coverage premiums and any applicable deductibles. Many dealers and third-party providers offer multiple plan options ranging from basic powertrain warranties to full bumper-to-bumper coverage. These plans can also be tailored to your budget and driving habits by allowing you to choose the specific components or services that are covered, and excluding those that aren’t necessary for most drivers.

Extended warranties cost more for luxury or sport vehicles than for common four-door sedans, but the price varies based on what type of coverage you buy and how long you want your policy to last. Similarly, some plans are more comprehensive than others, covering all mechanical and electrical malfunctions while others focus on the most expensive or likely to break components.

The length of your policy and whether or not you have to pay a deductible are also important considerations. Some warranty companies require that you pay a deductible upfront for each repair, while others deduct the cost of the repaired part from the overall bill. If you’re unsure about which option is best for you, consult with a service advisor at the dealership where you’ll be purchasing your new vehicle or ask your insurance provider to help you decide.

Depending on what type of coverage you purchase, you may be required to take your car to certain service locations for repairs, and some warranties expire after a set time or number of miles. These limitations can be a turnoff for some customers, but most dealers and third-party service providers make it easy to cancel or transfer a contract to a new owner.

A warranty can add thousands to the cost of a new vehicle, and some manufacturers and dealerships will only allow you to purchase one at the time of sale or within a specified window afterward. Third-party providers, however, can sell standalone policies at any time after a vehicle is purchased.

While some F&I managers will try to convince you that a warranty is a necessity, data shows that new cars are more reliable than ever before and that most people won’t need an extended warranty. Instead, financial guru Dave Ramsey suggests setting aside half of what you would have paid for the warranty and using it to pay for any unexpected repairs down the road. Keeping this money in a savings account will give you real peace of mind and may save you more than the warranty costs in the long run. If you do need an extended warranty, consider waiting to buy one until your vehicle approaches its third birthday. By then, you’ll know how much you love your vehicle and if it has any history of problems. extended warranty on new car

Leave a Reply

Your email address will not be published. Required fields are marked *