Extended warranty on your vehicle - do you need it?
Car dealerships love extended warranties as they are an extra profit generator for their business. An extended warranty is repair coverage that comes into effect after the expiration of the bumper-to-bumper warranty that the manufacturer offers. Extended warranties cover most major breakdowns and are supposed to stabilize the cost of repairs since the price of parts as well as labor tends to fluctuate with time. Purchasing an extended warranty after the manufacturer warranty expires is also possible albeit at a much higher price.
The question on everyone’s minds when they’re offered an extended warranty is whether or not they’ll need it. To answer that question, ask yourself these.
Who stands behind the warranty? Most dealerships offer third-party warranties from companies with different track records. Make sure any extended warranty offered to you is backed by the automaker and not just the dealership or another company. The advantage of this is that you’ll be able to use a manufacturer-backed extended warranty at any dealership across the country.
Do you know what’s covered? Extended warranties do not cover everything. Parts that will eventually wear out are usually not covered. Lots of extended warranties also come in tiers with their own price and level of coverage, so find out what’s covered and what isn’t.
Do you really need this warranty? There are many who can make you feel like you’re taking a huge gamble by saying no to an extended warranty. However, you should know that new cars are more reliable than their predecessors ever were and data on the subject has indicated that most people won’t ever need an extended warranty. A recent study by J.D. Powers has indicated that vehicle dependability is going up and has improved in 2018 for the first time since 2013.
To sum up, it really depends on your situation. Is the model you’re buying known to have a lot of problems that are covered by the extended warranty? Is the plan being offered to you a great value proposition? Only you can answer these questions. As always, doing research beforehand can save you a lot of money, hassle, and time.