Getting Extended Car Warranty Coverage

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October 27, 2020

Purchasing extended car warranty coverage provides peace of mind that you will not endure costly repair bills should something happen to your car after the initial warranty expires. New cars frequently come with bumper-to-bumper coverage of three years or 36,000 miles (whichever comes first). Some car purchases also come with powertrain warranties of five years/60,000 miles, which cover fixing parts of the vehicle necessary for it to run. For people who plan to keep their car for a longer period of time or who drive a great deal and quickly reach the mileage limit, an extended warranty may prove particularly attractive.

Before spending your hard-earned money on an extended car warranty (also known as a vehicle service contract), it pays to understand the ins and outs.

Extended Car Warranties Are Not All the Same

Items included in a vehicle service contract vary from plan to plan. Note from the start, though, that warranties rarely cover procedures deemed as regular wear-and-tear or routine maintenance. Thus, don’t expect to get free oil changes or replacement tires when your treads lose depth.

Extended warranties tend to be one of two types: inclusionary or exclusionary. As the name implies, an inclusionary policy only covers repairs included on the contract. If something is not listed on the document, it isn’t covered. By contrast, an exclusionary policy contains a list of specific repairs that are excluded from the warranty. Anything that’s not specifically listed as excluded is covered by this type of warranty.

Other important things to think about when buying an extended warranty for your car include:

• Is there a deductible?

  Operating almost like an insurance policy, some plans require the car owner to pay a certain amount out-of-pocket before warranty coverage kicks in. While this arrangement may end up being cheaper when purchasing the policy, decide if still having a financial obligation is right for you.

• How are repair costs paid?

  The company offering the extended warranty may handle everything related to bills itself. Others can require you to pay for what gets fixed and then send in the receipt for reimbursement. If you don’t like this latter method, pick a different plan.

• How fast can repairs be made?

  Some policies require pre-approval from the warranty company before repairs can start. Car owners who are very dependent on their vehicles may want to investigate how long this approval process generally takes and opt for a warranty without red tape.

• Who can make the repairs?

  Don’t automatically assume you’ll be able to take the vehicle to your favorite neighborhood mechanic. Policies often specify the shops at which repairs can be made. Check to be certain the approved facilities meet your preferences, especially in terms of how convenient they are to your home. If you travel a good deal, checking into where the car can be repaired when out-of-town is advisable.

• Is the contract transferable?

  Advertising that your vehicle comes with an extended warranty can be a great attraction should you decide to sell it. Just make certain from the get-go that the contract is transferable to a new owner.

Take Time to Consider Your Extended Warranty Options

Salespeople sometimes pressure consumers into immediately buying a vehicle service contract when they purchase their car. Other than if you want to fold the price of the extended warranty into your overall financing, a decision need not be made on the spot. Unless you post exceptionally high mileage, you can generally buy an extended warranty at any time during the vehicle’s life (though prices could go up considerably later in the car’s life). Many people wait until nearer to the expiration of the three-year bumper-to-bumper warranty to determine if buying an extended warranty is in their best interests. Plenty of eextended warranty options exist beyond what the dealer presents. Compare rates and terms until you find something that suits your needs. Investigate companies to see what other customers say about them. Thinking rather than rushing enables buying an extended warranty with confidence, not just out of fear.