When buying an extended car warranty, as in so many other aspects of life, it’s important to be fully informed before making your purchase. Before making the commitment to a provider, take the time to fully explore the ins and outs of the various coverages. Many coverages look similar; you should request copies of every contract you are considering, and then compare them to determine what best fits your needs. If a warranty seller will not let you see this before you buy then you should be looking elsewhere.
Some Important Extended Car Warranty Questions:
Do I really need an extended auto warranty?
There are many reasons to purchase extended coverage. Your vehicle is one of your biggest investments. The warranty will ensure it is always in the best mechanical condition. With the complexity of today’s vehicles, one major repair often costs more than the warranty itself. So from a financial standpoint, it definitely makes sense to have the extra coverage on your car.
These days, the manufacturer’s warranties are definitely stronger than they used to be, as that is one of the things that they compete against each other with. For example, Hyundai, Mitsubishi and Kia offer very extensive coverage: Five years/60,000 miles bumper to bumper, ten years/100,000 miles powertrain. But it still makes sense to purchase additional coverage for yourself that kicks in once you’ve passed those milestones. And keep in mind that certain coverage changes when you’re not the original owner, so those impressive numbers might not apply to your case.
When should I buy coverage?
With most extended warranties, you’re never buying double coverage. Your extended warranty is less expensive the earlier you purchase it. As the vehicle ages and accrues mileage, the price for protection rises. Prices may also rise due to increasing labor and parts prices. You will be offered the lowest price and longest term the newer your vehicle is. The company usually takes into account the time left on your manufacturer’s warranty, if any, and takes over after it expires. So you can save money by locking into today’s low prices and protecting yourself from tomorrow’s rising repair rates.
Do I need extended coverage on a lease vehicle?
No, you do not. The extended warranty is for those buying a car, who may encounter some problems down the road after coverage expires. You typically have your lease car for a period of three years, during which everything will be covered. Extras such as a tire package for example can be built into the lease payment…you don’t need to buy extended coverage on a lease.
Who will I call to authorize and pay my claims?
Make sure you know the company that will be authorizing and paying your claims. You should look for a company that handles all aspects of claims and allows you to use the repair facility of YOUR choice (dealer, national chain, local mechanic). The claims should be paid immediately to the repair facility via corporate credit card, with no need to lay out money for repairs. They should cover all parts, labor and even sales tax (if applicable) with no limit on the number of claims you may have.
*IMPORTANT* Make sure that the company you are considering will pay the full, posted labor rate to the repair facility and not just the hourly rate designated by the repair guides. Also, review the extended car warranty contract to verify if it is the administrator’s sole discretion as to the types of parts that can be used when repairing your vehicle. These hidden clauses in extended auto warranty contracts usually mean out of pocket expenses for you later on.
What kind of responsibilities do I have?
Usually you will have to keep up with the vehicle maintenance in order not to void your extended car warranty contract. And that makes sense. If you neglect regular maintenance, e.g. your recommended oil change, and damage is done, the coverage provider might contest a repair…and they certainly have a right to do so. Their coverage assumes you’re going to do at least the bare minimum to keep the car in tip top shape.
Are there any extended warranty providers that you would recommend?
We’ve researched this topic pretty heavily and we do have a company that we have been working with for quite some time. It is called Warranty Direct and they are one of the pioneers in the online warranty business. They offer up to 40% savings over dealer prices, so it’s a great place to start.
Other Questions to Consider
What is the company’s track record regarding customer service?
What is the company’s customer experience?
How long has the company been in the warranty business?
How long have they been selling warranties online?
Buying an Extended Auto Warranty At Dealership vs Third Party
Should you get your extended warranty at the dealership or through a third party provider? That’s a very good question and one that’s not very easily answered. Here we look at the pros and cons to help you make a more informed decision.
Buying at the Dealership
PROS
- Easy and convenient
- Can be built right into monthly payment
- Tied directly into the car manufacturer
- Safe and reliable
- Clear cut terms
CONS
- Oftentimes more expensive
- May be repair facility restrictions
- You’re not dealing directly with coverage company
- Sometimes has hidden fees/additional interest payments
Buying From a Third Party
PROS
- Can save a lot of money
- Often less repair facility restrictions
- Dealing directly with the company
- Can get multiple quotes
CONS
- Some companies can be disreputable
- Need to do more research
- Have to be more aware of terms to protect yourself
- Some repairs may not be covered
There are a lot of advantages to just buying the extended warranty at the dealership. It’s quick and easy and tied directly to the manufacturer. But you’re often paying a lot more for that added convenience. So if you’re willing to do a little research, you can often find some very reputable third party extended warranty providers. It may just be worth it to save money that can be used elsewhere.
Extended Car Warranty – Summary
Check sites such as the Better Business Bureau to see what other customers are saying about their experience with the extended car warranty company just to make sure you’re dealing with a reputable entity. See what rates they are offering you and compare quotes from different companies to see who is offering you the best deal.
Remember, these companies are competing for your business, so it makes sense to shop around to see what kind of deals you can get from various companies.