The car buying process can be confusing, especially when it comes to deciding whether or not to purchase an extended warranty for your used vehicle. This type of protection can add thousands of dollars to your overall costs and is often offered either at the dealership when you buy a new car or after-market as a stand-alone product. While many buyers feel the peace of mind that an extended warranty offers, it’s important to consider your specific needs and financial situation carefully before making a decision.
An extended warranty for a used car is a contract that covers a specific set of repairs and maintenance items, typically after the original manufacturer’s warranty expires. The cost of the plan can vary significantly depending on a number of factors, including the make and model, coverage terms and mileage restrictions. Some providers offer zero-deductible plans, repairs at a variety of certified repair shops and roadside assistance. A good way to compare different warranties is to get quotes from several companies, including the dealer’s preferred providers.
Generally, warranties cover parts that are likely to break or wear out in a relatively short period of time and may exclude items like oil changes or windshield wipers. Oftentimes, you’ll be asked to pay a deductible when you need to make a claim. It’s also important to determine who stands behind the warranty and what types of resolving options are available.
If you’re on a tight budget, it may be worth paying for an extended warranty in order to avoid a large unexpected repair bill that you wouldn’t have the resources to cover. However, if you’re comfortable with a little uncertainty and have enough money saved up in the event of a breakdown, it might be more financially prudent to skip the warranty.
A survey of credit union members found that they often put more money into extended warranties than they get out of them in reimbursements for repairs. Additionally, a 2014 study conducted by Consumer Reports found that an extended warranty for used cars may not be worth the cost.
As you shop for an extended warranty, be sure to look at the company’s customer reviews, BBB complaints and their responsiveness. In addition, it’s helpful to ask friends and family who have used the company for their experience. An extended warranty is an extra cost that can add up over time, even if it’s rolled into your auto loan. It’s important to weigh your options carefully and only purchase a warranty when it makes sense for you.