As a new car buyer, you may wonder whether an extended warranty is worth the cost. In many cases, it provides valuable peace of mind.
The cost varies depending on the provider and whether it is paid upfront or rolled into your vehicle financing. It’s important to weigh the benefits and costs before making a decision.
Cost
Most new vehicles come with a three-year, 36,000-mile bumper-to-bumper warranty. Some manufacturers have warranties that are longer. The cost of repairs can be high, so an extended warranty might make sense for some car buyers.
There are reputable extended auto warranties providers that do business with a high degree of ethics and care for consumers, but others may be less reputable. If you’re shopping for an extended warranty, be sure to look up reviews and ratings for providers before making a decision.
If you shop ahead of time, you’ll be able to avoid getting an extended warranty at the dealership and save money on the purchase. You’ll have a better understanding of how the warranty fits into your budget, and you can even negotiate the price of the warranty. You’ll need to decide if you want to pay upfront or roll the cost of the warranty into your financing. If you choose to do the latter, remember that it can impact your credit.
Convenience
Some people prefer to buy an extended warranty for the peace of mind it provides. The extra coverage could save them from having to pay out-of-pocket for repairs or run up credit card debt. But it’s important to do your homework before buying an extended warranty. Research the terms and conditions and customer service, including complaints and reviews. Also, make sure the plan covers the parts and repair shops you trust. Some warranty providers require that you pay for the repair out-of-pocket and then seek reimbursement, which can be a hassle.
If you’re considering an extended warranty, it may help to know that new car reliability has improved dramatically in recent years. Financial guru Dave Ramsey suggests keeping an emergency fund set aside for repairs instead. It may be a better option than paying for an extended warranty that won’t pay for itself.
Reliability
Ultimately, it’s up to the car buyer to decide whether the peace of mind an extended warranty provides is worth its price tag. To help make that decision, buyers should understand how these warranties work and find a provider with a solid track record for customer service and payment of claims.
Manufacturers’ warranties are built into the purchase price of new cars, and extended warranties — also known as service contracts — can be purchased to cover a vehicle after that warranty expires. Common plans include powertrain and bumper-to-bumper warranties, which typically cover a variety of parts.
In many cases, the cost of an extended warranty can be rolled into a loan, making it more affordable for buyers. However, if the money spent on the warranty could be better put toward an emergency savings account or an investment in another vehicle, it may not be worth the expense. Also, be sure to review a company’s terms and conditions to make sure it’s reputable.
Value
It’s not always easy to run the numbers on whether an extended warranty is worth it. You’ll need to do your research on the providers and read reviews so you know exactly what is covered by each plan. Especially with third-party warranties, there are often stipulations that make it difficult to tell exactly what is covered.
Moreover, it’s important to shop around before you head to the dealership. You may be able to find a better deal from a provider online rather than at the dealership.
The cost of an extended warranty varies depending on the age and mileage of your vehicle, as well as its type. A warranty for a luxury car will likely be more expensive than one for a mainstream vehicle. It also depends on the deductible and the way the company reimburses for claims. A low-deductible warranty will be more expensive than a higher-deductible one. It’s also important to consider whether your current savings are sufficient for a potential repair bill should you need it.extended warranty on new car
