Buying an Extended Car Warranty Might Be Worth It For This Type of Car Owner
It is the same for all car owners. We’ve all received the calls, emails, and letters about purchasing an extended car warranty. They might be annoying, but are they onto something? There is, however, a type of car owner who might benefit from buying an extended car warranty.
What is an extended car warranty, and what does it cover?
An extended car warranty, often referred to as a vehicle service contract, is an agreement between a buyer and a coverage provider. According to Credit Karma, an extended warranty may cover specific repairs during ownership, but it will not cover everything. For instance, a wheel and tire coverage plan may cover a flat tire for the cost of a deductible. However, that coverage has no bearing on replacing a transmission.
When is buying an extended car warranty is a good idea?
According to Consumer Reports, buying an extended car warranty might be good if a buyer doesn’t want to plan ahead. Jack Gillis, the executive director of the Consumer Federation of America, explained some of the benefits and costs in an interview with Consumer Reports. “If they want peace of mind and are not so organized, maybe getting an extended warranty is a good idea,” said Gillis.
Consumer Reports recommends that consumers buy as reliable a car as possible and that they plan for unforeseen repair expenses. If an owner abides by both guidelines, they can likely do without an expensive coverage plan.
However, if you wish to keep your used car for a long time, considering an extended warranty may be beneficial. Repairs can be expensive, especially when vital systems like engines and transmissions fail.
How much do extended car warranties typically cost?
Credit Karma states that the cost of an extended car warranty can vary, sometimes from $1,000 to $3,000 or more. Also, interest applies if the warranty is rolled into the auto loan. So you may end up paying extra just for purchasing the warranty upfront. Additionally, if you need to use your coverage, you may need to pay a deductible. According to Credit Karma, you will want to determine if your deductible is paid per visit or repair. A repair requiring more than one visit may require more than one deductible payment.
The best extended car warranty companies, according to WalletHub and Motor1
According to WalletHub and Motor1, the best companies to purchase an extended warranty are Endurance and Carchex. The companies secured top three positions on both WalletHub and Motor1’s lists. Carchex secured a first-place finish with WalletHub and a second with Motor1. Also, Motor1 awarded Carchex based on its merit for used car coverage.
Is buying an extended car warranty worth it?
Purchasing an extended car warranty might be worth it for a specific kind of owner. The warranty may benefit an owner who doesn’t want to save for potential issues in the future. It could also be helpful if a car buyer doesn’t heed Consumer Reports’ advice to buy the most reliable car possible.
If you choose to purchase an extended car warranty, know which entity is responsible for claims. Credit Karma says that going through a dealer or entity that goes out of business may compromise coverage. However, Jack Gillis agrees that if you are a buyer who likes to plan, you may want to skip the extended car warranty.