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Do I Need an Extended Vehicle Warranty?
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When you buy a new or used car, you want it to last and be free of any defects. The last thing you need is costly repairs. Often when signing the paperwork for your new vehicle, the dealer or salesperson may offer you an extended warranty that kicks in when the original manufacturer’s warranty expires. The decision to purchase one or not is entirely yours but do so armed with this information.
What is an Extended Warranty?
Extended warranties are like insurance policies; they provide peace of mind and a specific cost structure for any repairs needed beyond the original scope of the manufacturer’s warranty. However, they usually benefit the salesperson much more than the car owner. If you purchase a car and want to know that certain things are covered well after the warranty expires, then you may wish to purchase an extended warranty.
The dealer typically offers extended warranties at the time of the sale. However, other companies that purchase sales lists may contact you well after you buy your car and offer you an extended warranty. Some of these are scams, but some may be legitimate.
Consumer Reports (CR) generally advise against extended warranties claiming that they are not warranties at all and do not provide the same legal protection as manufacturer’s warranties. They are basically service contracts or insurance policies instead. In surveys, CR members typically paid too much for these policies and never reaped any benefits, making them worthwhile. That being said, some owners were still glad they purchased the additional coverage for the peace of mind they received against worrying about costly repairs down the road, whether or not they actually happened.
What About Factory Warranties?
When you purchase a new car, it comes with a manufacturer’s warranty, sometimes called a factory warranty. It covers repairs and defects for a specific amount of time or miles on the car. Some warranties are bumper-to-bumper, meaning everything is included. If anything breaks or goes wrong with the vehicle, the manufacturer will fix it or replace it without any cost to you. Warranties may exclude some items like tires, windshield wipers, and brake pads. These items are relatively inexpensive to replace, so it’s not a big deal. Warranties do not cover regular maintenance like oil changes or tune-ups. Some warranties extend up to 6 years or 60,000 miles. Others stop at three years or 30,000 miles.
Car dealers found that a unique way to add a revenue stream to their already lucrative business was to offer new car customers extended warranties. Like insurance, they get paid for something that they generally never have to pay back out. However, be forewarned, extended warranties can be replete with a lot of legalese and very complicated to understand. In some cases, the “loopholes” may prevent you from ever getting any repairs covered.
There is one caveat you should be aware of. Some factory warranties require that you maintain the vehicle properly, meaning you change the oil every few thousand miles, you have tune-ups and minor parts replaced on a suggested schedule. If you fail to maintain the vehicle according to the manufacturer’s suggestions, they may deny a claim when you need significant repairs. Some things can void a warranty, so read the policy carefully and protect your investment.
What is a Used Car Warranty?
For most people who buy and sell cars within a few years, an extended warranty doesn’t make a lot of sense. However, those who are buying used cars might need some extra work done, it may be more economical to purchase extended coverage.
A used car warranty may be one of two things. Some used car dealerships offer a portion of or the entire factory warranty that the car came with when it was new. In some cases, this warranty may be stripped down. Certified pre-owned vehicles often come with these warranties because the dealers restore them and replace parts, so they know they are in good shape before they leave the lot.
If your used car does not come with a factory warranty, you can usually still purchase an extended warranty from the dealer or a third party if you want. Be sure to shop around and use only a reputable company. Read all the fine print, so you know exactly what you are getting and if the extended warranty is transferable to pass along to the next buyer of the vehicle.
Car Warranty Scams to Watch Out For
Along with all the other scams out there, criminals will try to call, email, text, or even pop-up ads to get you to purchase an extended warranty for your car. It may look like a great deal. Because they are lying, they can say anything, and it may seem like you are getting a factory bumper-to-bumper warranty with everything covered for pennies. Be careful though, it’s probably a warranty scam. Any extended warranty offered to you out of the blue, is probably not worth trusting.
How to Check a Car Warranty by VIN
The good news is, you can go online and use one of the many VIN number lookup tools to check to see if your car or one you may purchase has an original warranty left on it. You simply enter your VIN number and see all kinds of information about the vehicle, including any recalls, accidents, repairs, and the warranty details. It’s worth checking out before purchasing any used cars.
Should I Purchase an Extended Warranty?
No one can tell you if you should or should not purchase an extended warranty. You must compare the risk versus the extended car warranty cost.
If the benefits to you outweigh the price, then it makes sense. If you would sleep better at night knowing that after your original warranty runs out, you are still covered for significant repairs, then shop around and find the best, extended warranty you can.
However, if you plan on keeping the car a short time and then selling it, don’t waste your money. Save if for more fun things like fuzzy dice to hang on the mirror!