Purchasing an extended warranty for my car is a common way to offset repair costs after your factory warranty runs out. However, not all warranties are created equal and it is important to read the fine print before making a purchase. There are two types of extended car warranties: manufacturer-specific and third-party companies. Whether you go with the dealer or a third-party provider, there are advantages and disadvantages to both options that should be considered before deciding which one is right for your vehicle.
Typically, a manufacturer-specific extended warranty is more expensive than a third-party extended warranty but it has the benefit of covering repairs by factory-trained dealership technicians and using OEM (original equipment) replacement parts. Additionally, these plans are usually transferable if you sell your car and will provide coverage for maintenance items as well. The downside of a manufacturer-specific extended warranty is that it can limit where you can take your car for service and may require authorization before having a specific part repaired.
Third-party extended warranty providers can be less expensive than a manufacturer-specific plan, but the quality of their contracts varies widely. It is crucial to shop around for the best price and look at the company’s customer reviews before making a decision. You should also consider how the policy works when it comes to deductibles. Deductibles are usually charged per repair or per warranty service visit, so it is important to understand how your deductible will work before making a purchase.
Bumper-to-bumper warranties tend to cover the most repairs, but they don’t cover everything. For example, the bumper-to-bumper plan typically doesn’t cover maintenance items like oil changes, new tires and brakes. Also, most of these policies require that you use a certified mechanic for your repairs.
Many third-party extended warranty providers offer a range of payment structures. You can pay for the entire contract up front, make a monthly payment or roll the cost into your vehicle’s financing. Increasing competition among third-party providers drives down contract prices.
In addition to the price of the extended warranty, you will need to factor in your vehicle type, model year and mileage. Older vehicles and higher-mileage used cars are more likely to need repairs, so you’ll pay more for an extended warranty on them. Similarly, the longer your factory warranty lasts, the less you will pay for an extended warranty.
Unless your vehicle is very old or high-mileage, an extended warranty can be a good investment to ensure that you are not responsible for paying for costly repairs after the factory warranty runs out. It is also a great option if you want to keep your car beyond the traditional age and mileage limits that are included in its manufacturer warranty. But if you’re able to get the same peace of mind and convenience at a lower cost, consider shopping for a reliable car with better predicted reliability and following manufacturer recommendations for regular maintenance instead. Then you can be confident that your car will be safe and dependable for the duration of its ownership.