The cost of a vehicle extended warranty can be added to your car loan at the dealership, and may provide peace of mind. However, third-party warranties vary in terms of price, coverage and deductibles.
Ask the company whether the contract can be transferred to a new owner and whether it has kilometer limits or age of the car restrictions. Also, make sure you understand what is excluded from the policy.
Cost
An extended warranty can be an excellent way to protect yourself against expensive car repair bills. However, you should shop around to find the best deal. There are many reputable providers that offer quality service at a reasonable price.
The cost of an extended warranty depends on a number of factors, including the age and mileage of your vehicle. Generally, warranties for vehicles that have more miles tend to be more expensive than those for younger vehicles.
You can also save money by creating a sinking fund, which is savings that you set aside for an emergency, such as car repairs. Try to automate a transfer from your checking account to this fund every time you get paid. This will help you build a cash cushion quickly.
Benefits
Depending on the specific car and its owner, an extended warranty or vehicle service contract may make sense. It can help ease anxiety about a potential costly repair after the manufacturer’s warranty has expired. It can also be a good option for people who drive used cars or those who anticipate having to pay for repairs with their own money.
Some warranties offer additional benefits such as roadside assistance, rental car reimbursement and trip interruption coverage. In addition, some of them cover wear items that aren’t covered by the original manufacturer’s warranty. Some also include maintenance coverage in addition to the powertrain and bumper-to-bumper warranties that come with your new car. It’s worth asking about these details when shopping around. Some extended warranties are more affordable than others.
Deductibles
An extended warranty is a plan that covers mechanical failures from normal use. It typically costs more than an insurance policy and may include a deductible. It also might exclude certain components and cover others only under specific conditions. Many warranties offer perks like roadside assistance, rental car reimbursement, and towing.
It’s important to know what’s covered by an extended warranty before you purchase it. Many plans have 30-day or 1,000-mile waiting periods to prevent consumers from buying them to cover preexisting problems. In addition, some warranties do not cover damage caused by natural disasters or Acts of God. Most of these plans require you to maintain your vehicle according to the manufacturer’s specifications. You can find reviews of these plans online. Some are positive, while others express dissatisfaction with their coverage.
Exclusions
Many people think an extended warranty will cover everything, but that is rarely the case. Whether you purchase a factory or third-party extended warranty, most of them have some kind of exclusions that prevent them from covering unforeseen repairs. These can include things like normal wear and tear, abuse, improper installation, natural disaster damage, and long-term environmental damage.
Depending on your provider, there are several ways to void your extended car warranty. For example, some warranties require you to take your vehicle to a specific shop for service or they will not cover any of the repair costs. Other examples of voiding your warranty include making unauthorized modifications to the vehicle, title issues, and accidents. You can avoid these issues by choosing a reputable warranty provider like Toco or Endurance.
Transferability
Some dealerships and manufacturers offer extended warranties, but you can also purchase them from independent car warranty companies. If you decide to buy one, make sure it is transferable when you sell your vehicle and that you can cancel if the company goes out of business before you need to. It’s also important to know that a vehicle extended warranty does not provide total protection and may include a depreciation factor that reduces the amount paid for repairs based on your mileage.
Most manufacturer extended warranties are transferable when the vehicle changes hands. However, you should check the fine print to see if there are any hoops to jump through to do so. Some providers, such as Endurance and CARCHEX, charge a fee to transfer a policy.