When you’re standing at the car dealership ready to exchange a sizable chunk of money and several signatures, it can be tempting to also sign up for a new car extended warranty. However, a few tips can help you decide whether or not this is the right purchase for you.
First of all, understand what you’re getting. A new car extended warranty is a service contract that covers repairs to parts of your vehicle that aren’t covered by the manufacturer’s original factory warranty. Typically, these contracts are administered by a third-party company. Before you sign up, find out who’s behind the policy and what their reputation is like. Check online reviews and customer satisfaction scores for the provider to see what people are saying.
Another thing to consider is how long you’ll keep the car. If you plan on trading it in every two or three years, an extended warranty may not be worth the money. On the other hand, if you’re planning on keeping it for five or more years, an extended warranty can potentially pay for itself.
When researching extended warranties, you should know that most of them don’t cover scheduled maintenance items like oil changes or timing belt replacements. Additionally, some extended warranties require you to have a repair facility or tow truck that is approved by the warranty provider. In most cases, these providers will contact you before paying for repairs to ensure that the work is needed.
While researching, you should also take the time to compare pricing. Many companies offer different plans with varying coverage and term lengths, so you’ll want to make sure that you’re getting the best deal possible. Be prepared to provide the year, make, model, mileage and VIN of your car so that you can receive an accurate quote. Some companies allow you to roll the cost of your extended warranty into your car loan, which can save you upfront cash. However, be aware that you’ll likely have to pay interest on the additional amount, which can end up costing you more in the long run.
Buying an extended warranty from the dealership is often more expensive than getting one through a third-party. Dealerships are able to inflate prices to make a profit. However, if you take the time to shop around and negotiate, you can find better deals.
It’s also important to know that extended warranties can be canceled at any time, which may be helpful if you decide the car isn’t right for you. If the warranty was rolled into your loan, you can cancel it before the contract ends to avoid paying any extra interest. However, if the warranty is a separate payment, you’ll need to ask your lender whether or not it can be cancelled. Be sure to ask how much it will cost you to cancel the warranty before signing. This will give you an idea of how much you might need to budget for canceling the contract. new car extended warranty