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Five Questions You Should Answer Before Buying an Extended Warranty

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On: Tue, Jan 28, 2014 at 1:54PM | By: Bill Wilson


Five Questions You Should Answer Before Buying an Extended Warranty

Extended vehicle warranties have become almost as common as life insurance and retirement funds.  On the surface they seem to make good sense.  After all, why pay through the nose for car repairs when you don’t have to?  But, before signing your name to an agreement that may or may not be worth the paper it’s printed on, ask yourself the following questions first:

1. Who stands behind the warranty? Just because it’s offered by the dealership doesn’t mean that the actual manufacturer of your vehicle will honor it. Some of these plans are honored only at the place where you bought the car or truck. Others are good only at select garages in your area. If you travel a lot, then make sure the warranty you purchase goes where you go; otherwise it may let you down when you need it most.

2. Does it offer the most value for your dollar? There are hundreds of companies that offer extended warranties these days. They vary widely in terms of the fees they charge and the services they offer. So don’t let a dealer pressure you into buying the warranty the same day you finance the car. In most cases you have until the manufacturer’s original coverage runs out to buy the plan.

3. How long do you plan on keeping the vehicle? If you buy new cars and trade them in every two to three years, then you will probably be fine sticking with the plan that comes with the vehicle. On the other hand, if you keep a vehicle for as long as possible, then an extended warranty is probably a good idea.

4. Is the company reputable? Unfortunately, some unscrupulous operators have victimized drivers in recent years by offering worthless warranties with nothing backing them. When the buyers needed service they had nowhere to turn; the perpetrators of the scam had either disappeared or were in jail. So check up on the guarantor of the warranty, especially if it comes from a third party not associated with the automaker or dealership.

5. How much peace of mind will it buy you? If you think passing on the warranty will keep you awake at night, then it’s probably better to get it, just for the sake of your mental health. On the other hand, if you’ll never give it a thought one way or the other, and if the vehicle has a reputation for long-term reliability, then you may wish to save the added costs an extended warranty entails.

An additional warranty can be a great way to protect yourself from large repairs and the high price tags that come with them. But, before agreeing to anything, make sure the plan fits your needs and your budget. This way, you can be sure your interests are truly protected by the arrangment.




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