Is it Worthwhile to Buy Extended Warranties on Cars?

Facing unexpected and expensive vehicle repairs can happen to anyone, as the owner is responsible for vehicle repairs outside of the warranty period, even if parts become faulty through no fault of their own. Not having adequate protection in place can potentially cost you thousands. To avoid this situation, consider the benefits of purchasing an extended warranty.

Manufacturer's Warranty

Check how long the manufacturer's warranty lasts. Usually two are standard: a powertrain and a bumper-to-bumper warranty. The bumper-to-bumper warranty, which often runs for a shorter period than the powertrain, covers just about any vehicle items that are not maintenance or bodywork related. Examples of maintenance items are brakes, rotors and windshield wipers. Major components of the engine and transmission are covered by the powertrain warranty. Even if you buy a used car, the remaining mileage and years left on the original warranty still applies to the vehicle.

Extended Warranty Benefits

If the vehicle you purchase will be running out of its manufacturer's warranty while you own it, purchasing an extended warranty has its benefits. Car repairs are expensive and often unexpected, which can leave you without a car. Should you need to shell out hundreds or thousands of dollars, you'll be happy to have an extended warranty in place. The cost to purchase a warranty is around $1,000 and up, although the cost is usually made up if repairs are needed.

Vehicle Intentions

Consider the manufacturer's warranty period and how long you plan to keep the car. In the event that you want to lease a new car for 36 months at 12,000 miles-per year, you will be covered by a warranty already. Many warranty companies require owners to purchase coverage before the vehicle runs out of the manufacturer's warranty, and it is cheaper to purchase one while the odometer miles are low. If you plan to keep the car past its warranty period, it is beneficial to have an extended warranty in place as soon as you can purchase it.

Other Considerations

Extended warranty companies differ. Ask the warranty provider where you can take your car for repairs; some require you to return to a same-make dealership to complete repairs. Others allow you to take the car to any authorized shop. Ask about your deductible, as well. If you lower your deductible, the policy costs more, but it may not make sense to purchase a warranty and then find you need to shell out money for repairs anyway. Choose a low deductible or none at all, otherwise your warranty may not cover the repairs you need.