Is It Worth To Buy Extended Warranty For Car

Buying a car is an investment. Second to a home, it is most likely the largest single purchase that most people will ever make. And like most purchases of great value, we aim to protect them, hence the invention of the Extended Warranty. But many questions remain. Are extended automobile warranties a value-added proposition that can help protect you from unexpected repair costs? Or are they a scam designed to rip off the unwary?

is it worth to buy extended warranty for car

Extended Warranties are typically chosen by buyers that intend to maintain ownership of their vehicle beyond the initial warranty. Like manufacturer warranties, most extended warranties are designed to cover all or most of the cost of a specific set of repairs arising from vehicle ownership. Unlike manufacturer warranties, there is often a deductible involved. Repairs to major systems like the engine, powertrain and transmission are typically covered.

For example, if you choose not to get your oil changed regularly and the engine suffers a breakdown, the necessary repairs will not be covered. Likewise, modifying the structure, suspension or mechanical systems of your vehicle, although they might make it more efficient, will most likely result in a denied claim or even void your extended warranty.

Also, most issuing agencies specify the vehicle is not to be used for commercial purposes like ride- or car-sharing, delivery driving or other business interest. That said, the gig economy is still new for insurers, and specialized plans designed for this type of work may evolve in the future. If you have this in mind, give any potential warranty issuers full disclosure before signing to void a dispute later.

I have gone over a decade without buying an extended warranty. Along the way, I learned a thing or two about the practice which seems to dominate the time and energies of associates and salespeople at many retail locations. The extended warranty market is big business. In fact, companies often outsource extended warranties to larger insurance companies. These companies then stuff these policies with limitations and conditions designed to make it more difficult to actually make a successful claim.

The salesperson selling the policy also typically gets a bonus or commission. And of course, the insurance company backing it makes money. All of this should give you a very clear picture that an extended warranty is NOT in the best interest of the end-user.

A quality warranty from a reputable company can be worthwhile, but you'll want to do some research first to see whether you're getting a good deal or wasting money. After all, warranty extensions are highly profitable for the companies that offer them.

Unfortunately, there are a lot of warranty scams out there, and even those warranties offered by new and used car dealers can have a lot of strings attached. A quick web search of the name of the warranty you're looking to buy can be a good start, but even then, you'll likely want to read through the fine print.

One of the most common catches is a warranty that will only cover or reimburse for services performed at a particular chain or network of repair shops. Unless you are comfortable with having a particular shop work on your vehicle for the entirety of the warranty, this is likely a deal-breaker.

You'll also want to look at just how broad the coverage is. An extended warranty generally will not provide the same level of coverage as the original warranty provided by the car manufacturer when the vehicle was new. Instead, the extended warranty may only look at powertrain components (engine, transmission, and axles), leaving you out of luck if, say, one of the power window switches fails or the infotainment display goes blank.

There is no firm line in the sand when it comes to extended warranty coverage for a used car. Even a vehicle with a good reliability record, a clean pre-purchase inspection, and a stack of records showing meticulous care from its previous owner can have a costly item fail.

Looking at reliability ratings when you purchase a used car can give you a glimpse into whether the car will need major repairs over the course of an extended warranty. Of course, warranty providers know this, and they price their products accordingly. A warranty for a complicated, less-reliable model is most likely going to cost more than similar coverage for a simple car with a stellar reputation.

By their very nature, extended warranties are something of a gamble. You can't predict just how much your car is going to cost you in repairs down the road, of course, but you can get an idea of how frequently you may expect to encounter major repairs.

You can, however, prepare to repair the items that commonly fail in your vehicle. From there, you can contact shops for an estimate of how much those items might cost to replace. If a sensor failure commonly occurs around 50,000 miles and it costs $500 to replace, then you know the warranty will at least cover that item.

Most used car extended warranties will require you to shell out a deductible with every claim. A higher deductible will make for a less costly warranty, but it can also invalidate the peace of mind provided by the coverage, especially if you use it often.

Some extended car warranties are transferable for free or for a small fee. Depending on how comprehensive the coverage is, this can be an added value when you decide to sell your car. Although typically, warranties are only transferable when you sell a vehicle to another private party.

Similarly, some warranties will refund you at least a small amount of money if you cancel the warranty before its expiration date. If you plan to sell or trade your car before the warranty expires, you may be able to get a refund.

Finally, if there's a particular component that you know is a vehicle's Achilles' heel when it comes to reliability, there's always a chance that the automaker is aware of this and has extended its own warranty to cover repairs down the road. Asking a dealership or a customer service hotline about extended coverage for any specific components may save you a bundle.

Many people question whether extended car warranty costs are worth it since plans must be purchased separately from your vehicle. Much of the time, car owners save money by buying an extended auto warranty.

If you own a luxury vehicle like a Lexus or a BMW, an extended warranty could save you thousands of dollars on expensive parts. A cylinder head replacement on a BMW 328i typically costs more than $11,000, which is many times the price of an extended warranty.

Purchasing a CARCHEX extended auto warranty eliminates this source of anxiety and protects your wallet against expensive repairs. It also removes the pain of lengthy paperwork and eliminates your need to negotiate with mechanics over fair pricing.

Unlike manufacturer warranties, extended car warranties provide unparalleled flexibility. For instance, CARCHEX allows drivers to take their cars to any authorized repair shop, while a warranty from the automaker usually requires the car be taken to a specific dealership.

CARCHEX extended car warranties are transferable for a small fee, which means you can provide the new owner with comprehensive vehicle protection. Individual buyers often see extra value in cars covered by vehicle service contracts, which could lead to a higher overall selling price.

Owners who believe that car warranties are worth it can pick up coverage from CARCHEX in all 50 states. Plans are known as mechanical breakdown insurance in California, and this service is almost identical to the extended warranties offered elsewhere.

One of the reasons that car warranties are worth it is that they make the repair process easier. No matter how much the pricing of parts fluctuates over time or location, car repair costs will be covered upfront.

In addition to our comprehensive warranty coverage, CARCHEX boasts accreditation and an A+ rating from the Better Business Bureau (BBB). This shows our complete commitment to providing top-notch customer service. We also provide:

Like all car manufacturers, Honda will sell you a vehicle warranty that goes beyond the standard warranties that come with your car. The name of the program is Honda Care. This warranty will take over after the original Honda warranties have expired. The idea is that you can extend the coverage that you get when you buy a new or newish Honda for peace of mind and to help you to manage unexpected large repair bills.

Honda Care mimics the Honda new car comprehensive warranty. So understanding what is covered is relatively simple if you understand the new car warranty. Most of the things that could break unexpectedly are covered. Be sure to read and understand your Honda Care contract to ensure that you know exactly what you are buying.

Other scenarios in which a Honda Care warranty can be helpful include giving your Honda to a family member. The warranty can be officially transferred to any new owner for a $50 fee. This is also great when selling a used Honda. The value to a new owner of having a Honda-backed full warranty is hard to overstate. Imagine if you were choosing between two Honda Civics for sale by private owners. One has a full Honda Care warranty and one does not. Which would you pick?

Before you sign on the dotted line, though, carefully read through the contract. Your plan should offer the most extensive coverage possible. It is best to take out an exclusion warranty, which provides the broadest coverage and will pay for everything except specifically mentioned repairs.

Another major factor to consider when purchasing an extended warranty is the reputation of the company behind the policy. Do a quick online search on the company and ask for references. Make sure the company is a nationally recognized enterprise and has a strong online presence, as lots of smaller, unknown companies can give you a very hard time when you try to make a claim.

Second, like any insurance policy, most extended warranty plans have deductibles that must be paid before coverage kicks in. While paying a deductible is standard, some of these plans have a deductible on every repair. This can be borderline ridiculous if you find yourself paying a $100 deductible for every $200 repair you need for the lifetime of your policy. 041b061a72