How to buy and save on an extended warranty

Michael James

If you're buying a new or used car, consider purchasing an extended warranty.

Purchasing a car is a big investment and potentially a big risk, particularly if you opt to buy a used or certified pre-owned vehicle. But if you plan to keep your newly purchased new or used car for a while, an extended warranty is worth considering.

If you're buying a new or used car, consider purchasing an extended warranty.
If you’re buying a new or used car, consider purchasing an extended warranty.

Even if the used car is certified, you will likely need repairs over time, and it they could be costly. Paying for repairs out of pocket is not only troublesome and expensive, it involves risk. The coverage afforded by a extended warranty helps avoid the risk and saves time and money.

Buying an extended warranty

Here are suggestions before purchasing an extended warranty:

Consider an exclusion warranty, especially if you qualify for such coverage. It’s a policy that basically covers everything except for items listed in the contract which it specifically excludes. Exclusionary coverage gives you possibly the most comprehensive warranty. It’s designed to lessen the chances of your coverage provider denying a claim or a repair.

Be sure the warranty’s cost is not prohibitive. When looking into payment options, you should never feel obligated to spend so much money to protect yourself against problems that may never come up for your particular car.

Additionally, you should be able to know and determine if you or your coverage provider is fronting the cost for the repair bill. Ask yourself and your representative the following questions: Are the repairs fully covered? How much is your deductible, if you have one? Does the coverage have you pay for the repairs upfront and then get reimbursed.

Keep in mind most but not all wear-and-tear parts — items in your car that will eventually break or wear out and are in fact designed with that in mind — are not covered by most vehicle extended warranties.

Who stands behind the extended warranty?

Many third-party warranties, meaning independent from automakers, are available for purchase by phone, online or through a dealership. If and when you decide to make the purchase for an extended warranty, sometimes referred to as a “Vehicle Service Contract,” you should make sure it’s backed by a reputable company that active in the industry for more than 10 years.

Endurance is an example. It’s backed by AmTrust – an AM Best “A” rated insurance company. That’s the kind of accreditation you’re seeking. Finally, you should not be afraid to shop around beyond looking at quotes.is an example. It’s backed by AmTrust – an AM Best “A” rated insurance company. That’s the kind of accreditation you’re seeking. Finally, you should not be afraid to shop around beyond looking at quotes.

It’s wise to check online reviews to see if the company is paying claims properly and that its customers are satisfied with coverage and service. An advantage with third party providers is that you will be able to use your extended warranty at any dealership or repair shop across the country.

Used Car Warranty Tips

Never limit yourself to buying an extended warranty on price alone. It is actually best to avoid unrealistically cheap plans. It’s likely they won’t offer the best coverage options.

Read and review the warranty contract as much as you can before buying and signing.
Any auto dealer’s glossy brochure is not a contract.

Collect multiple quotes to compare prices and coverage options.

Confirm the company you’re considering purchasing coverage from is accredited by the Better Business Bureau.

Should You Buy A New Car?

Most modern vehicles are far more reliable than previously. Therefore, drivers assume there is less risk of a breakdown. You might not think an extended warranty is necessary, but again, it’s worth considering.

Drivers are far more likely to keep cars longer since they are now made better. But the longer you keep anything, the more likely it will require repairs. If it’s a newer car and better built, it likely has more new technology and other components far more costly to repair or replace.

If you’re unsure about the benefits or an extended warranty, consider increasing vehicle repair costs. In many instances, a single covered repair could pay for the entire cost of an extended warranty plan. The last thing any vehicle wants is to get stuck paying for a repair.

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Contributed by Stefano De La Cuesta

Article Last Updated: October 7, 2016.

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