Extended warranties add extra time to the factory warranties that car manufacturers offer with their cars and trucks. They typically kick in at the end of a factory warranty and extend the time that a vehicle is covered. Hence the term “extended warranty.”
Car dealers often suggest them because they provide the customer with the security that any future repairs are covered long after the sale date. On the face of it, this seems like a winning proposition but some will argue that the probability that you will need the coverage is low with some products. If that’s the case, they will suggest that it might be best to save your money. Let’s take a closer look.
Extended Warranty Pros
As our friends at Kahlo Chrysler, Dodge, Jeep, Ram of Noblesville, IN, point out, if you plan to keep your vehicle past the expiration of the factory warranty, an extended warranty will buy you piece of mind. Although this will cost you additional money, you will almost certainly be able to fold the payments into your monthly new-car payments. Boiling it right down, extended warranties eliminate the risk that you will get socked with a big repair bill in the future. For many people, this is a secure feeling.
Extended Warranty Cons
Some will argue that there are downsides to extended warranties, as well. Yes, having an extended warranty gives you piece of mind, but if you never need it, “why buy it.” Why not take that additional money you save and invest it elsewhere? That’s the argument.
Another item to consider is your coverage. An extended warranty might not cover the same items that the factory warranty does. This can be especially true with third-party extended warranties.
The Company behind the Warranty
If you are considering an extended warranty, another detail to look at is the company behind the extended warranty. Are they a good company? In some cases, the insurance company is the manufacturer themselves. In this case, is usually going to be a good warranty because a major name is backing up the product. Some dealers offer warranties issued by third-party insurance companies. In this case, do your research and make sure a good company is behind the product.
Factor the Factory Warranty into Your Decision
As we mentioned above, some argue that given the increased reliability of modern vehicles, purchasing an extended warranty isn’t absolutely necessary. That’s especially true if the warranty offered from the original-equipment manufacturer is quite long to begin with. Take Hyundai, for example. Hyundai offers a 5-year/60,000-mile bumper-to-bumper warranty and a 10-year/100,000-mile powertrain warranty. This is a nice long warranty.
There is no right and wrong answer to the question of whether you should buy an extended warranty. Do your research and the result should make more sense when you have collected all the data.