To purchase an extended warranty or not to purchase an extended warranty: that is the question on a lot of car owners’ minds. Whether you drive a new car or a used one, there’s a lot to consider when deciding whether or not to protect your vehicle with a warranty from the manufacturer or dealership, or with a vehicle protection plan from an authorized third party.
The decision can seem overwhelming. There’s mileage to think about, coverages to compare, and, most importantly, prices to pay.
However, if you ask yourself the right questions and take the right advice, purchasing an extended vehicle warranty doesn’t have to be hard. Here are three tips every driver should keep in mind the next time they consider an extended car warranty.
Know whether you want to purchase your protection plan from the dealership or a third-party provider.
Before you start the process of protecting your car with a warranty, you need to decide where you’re going to purchase your warranty from. You can either purchase your warranty from an authorized dealership or manufacturer, or you can purchase a vehicle protection plan from a third-party.
(An important note about the term “extended vehicle warranty:” Only the auto manufacturer or an authorized dealership can sell you a true “extended vehicle warranty.” A third-party company sells vehicle protection plans, which guarantee practically the same coverage.)
There are pros and cons to each option. Some drivers of new cars may prefer to purchase their warranty along with their vehicle, completing their transaction in one place and paying their warranty on top of their car payments. In addition, when purchasing a warranty from a dealer, you have a better chance of negotiating the cost and terms of that warranty. Dealers are desperate to make the sale, so they’re more willing to work with you to get the warranty you need with the car you want to buy.
On the other hand, drivers of used cars or drivers of cars with an expired extended warranty may prefer a vehicle protection plan. These types of plans are less expensive and usually give you the freedom to choose any repair shop. In addition, some providers of vehicle protection plans offer no-fee payment plans. Unlike dealerships, which charge interest on extended vehicle warranties and roll it into the total cost of your car, some third-party providers help drivers pay for vehicle protection without the added costs.
Check out at least three auto warranty companies.
Like you would when you make any major purchase, never settle for the first company you get a quote from. It’s important to do your homework and check out at least three to five other dealers or warranty companies.
Each will offer different plans at very different prices. There are powertrain plans, bumper-to-bumper plans, and everything in between. A powertrain plus warranty from one company may differ greatly from the powertrain warranty of another. Also, the make and model of your car will impact your warranty. The price of an extended warranty for a Honda or a Chevy will definitely differ from that of a Mercedes Benz or Lexus.
Don’t limit yourself to warranties from dealers or companies in your backyard, either. There are companies selling warranties all over the country. You may be surprised by the difference a company outside of your immediate market will charge.
In addition to looking at the prices and plans each company offers, make sure each company is “A” rated and accredited. Check out the Better Business Bureau and read reviews on sites like Trustpilot. One reason many drivers worry about purchasing an extended auto warranty is that they fear being ripped off or swindled out of their money. While there have been companies that have been dishonest with their customers, there are plenty more with men and women who want to help car owners drive worry free.
Know the difference between “named-component” contracts and “exclusionary” ones.
There are two types of contracts you’ll be faced with when purchasing an extended vehicle warranty or a vehicle protection plan. They are named-component contracts and exclusionary contracts. Named-component contracts list only the parts of your vehicle that are covered by the warranty. They may include only a few components or many. On the other hand, exclusionary contracts name everything not covered by the warranty. Anything not listed is covered, per the terms of the agreement.
Know exactly what is and isn’t being covered. Is wear-and-tear covered? Are seat belts covered? What about transmissions or oil changes? Does this coverage transfer to the car’s new owner, should you decide to sell it?
It’s more cost-effective to ensure you’re purchasing a contract that covers all of your car’s components, instead of only a few. You’ll be paying thousands of dollars for a warranty. You want to make sure you’re getting your money’s worth.
Purchasing a warranty for your car is a huge decision, but one that will ultimately help you keep your car (and your wallet!) safe. It’s a decision you should undertake carefully. Know your options, do your research, and ask the right questions. Then, with an extended vehicle warranty or vehicle protection plan keeping you covered, you’ll be able to take your car out on the road and drive with automotive peace of mind.