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Is It Worth Buying Extended Warranty On A New Car

I have gone over a decade without buying an extended warranty. Along the way, I learned a thing or two about the practice which seems to dominate the time and energies of associates and salespeople at many retail locations. The extended warranty market is big business. In fact, companies often outsource extended warranties to larger insurance companies. These companies then stuff these policies with limitations and conditions designed to make it more difficult to actually make a successful claim.

is it worth buying extended warranty on a new car

The salesperson selling the policy also typically gets a bonus or commission. And of course, the insurance company backing it makes money. All of this should give you a very clear picture that an extended warranty is NOT in the best interest of the end-user.

Many people question whether extended car warranty costs are worth it since plans must be purchased separately from your vehicle. Much of the time, car owners save money by buying an extended auto warranty.

If you own a luxury vehicle like a Lexus or a BMW, an extended warranty could save you thousands of dollars on expensive parts. A cylinder head replacement on a BMW 328i typically costs more than $11,000, which is many times the price of an extended warranty.

Purchasing a CARCHEX extended auto warranty eliminates this source of anxiety and protects your wallet against expensive repairs. It also removes the pain of lengthy paperwork and eliminates your need to negotiate with mechanics over fair pricing.

Unlike manufacturer warranties, extended car warranties provide unparalleled flexibility. For instance, CARCHEX allows drivers to take their cars to any authorized repair shop, while a warranty from the automaker usually requires the car be taken to a specific dealership.

Owners who believe that car warranties are worth it can pick up coverage from CARCHEX in all 50 states. Plans are known as mechanical breakdown insurance in California, and this service is almost identical to the extended warranties offered elsewhere.

An extended car warranty is a consumer contract usually purchased when a vehicle is new. These contracts vary widely in price and usually come with several levels of protection. Exclusions apply and additional out-of-pocket costs are possible. Extended warranties are offered by the vehicle manufacturer as well as by third parties.

What drives consumers to purchase an extended car warranty? For some, it is a robocall that warns them that their original car warranty has expired. Those calls, though, should be avoided as the majority are not legitimate, but they do serve as reminders that all warranties must eventually come to a close.

On the other hand, if you wait to purchase an extended warranty, your cost will be based partially on the miles accumulated per your odometer. During that time, the service provider may notice a repair pattern emerge for the vehicle, even if it is still under the manufacturer's warranty. By then, the cost to purchase a warranty will have risen, perhaps considerably. Furthermore, like any warranty, the service provider calculates risk and prices the contracts accordingly.

How likely are you to use an extended warranty? In a 2014 article, Consumer Reports noted that 55% of consumers who had purchased a service contract never used it. At that time, the average cost for such plans was $1,200 and has climbed steadily since.

Finally, if you choose an extended car warranty, most can be canceled by the consumer. Keep this option in mind if you decide later to sell the vehicle or find that it is more cost-effective to maintain a repair savings account instead.

Extended car warranties can be a saving grace when you experience a mechanical breakdown, but they can also add a few thousand dollars to your cost of vehicle ownership. At the end of the day, are extended car warranties worth it?

An extended car warranty, or vehicle service contract, promises to pay for certain car repair costs after your factory warranty expires in exchange for an upfront or monthly payment. Unlike a car insurance policy which covers you in the event of a collision, extended car warranties protect against mechanical breakdowns or manufacturer defects in materials or workmanship.

Extended warranty plans pay for parts and labor for covered repairs, leaving you responsible only for your coverage premiums and your deductible. You can also end up saving money in the long run if you use your extended warranty coverage multiple times or have an exceptionally large repair.

Based on our research, a good price for an extended warranty is anywhere from about $1,700 to $3,000. The reason for such a wide range is that costs are highly variable and dependent on your vehicle, the company you buy your plan from, and the choices you make about your coverage.

For example, according to our research, a five-year full-coverage warranty for a new Toyota Camry may cost you between $1,700 and $2,500. If you skip the extended coverage and pay for Toyota repairs out of pocket, you may end up paying about $2,200 over five years.

You can determine whether an extended car warranty would be worth it for your vehicle by looking at average repair costs on RepairPal and comparing the data with quotes from multiple extended warranty companies.

Third-party warranty providers tend to offer more flexibility than manufacturers in terms of cost, repair shop availability, and coverage options. Reputable extended warranty companies can offer term lengths up to 15 years and 250,000 miles, depending on the provider. Drivers who plan on sticking with their car for the long-haul would definitely benefit from such a long coverage plan.

In many cases, an extended car warranty may be worth the cost. If your vehicle needs major repairs to the drivetrain or other critical components, those costs could easily exceed the cost of the protection plan and save you money.

An extended warranty for your car has a few disadvantages despite having many upsides. The main disadvantage is that you may not use the coverage you pay for. Some low-quality providers can also be a hassle to deal with and may make it difficult to use your coverage.

Our expert review team takes satisfaction in providing accurate and unbiased information. We identified the following rating categories based on consumer survey data and conducted extensive research to formulate rankings of the best extended auto warranty providers.

But just as you've breathed a sigh of relief, you realize that you are walking into the finance and insurance (F&I) office to sign the contract. Once inside that room, the F&I manager will likely offer you things such as paint protection, prepaid maintenance plans, theft-recovery systems and a road-hazard warranty for your tires. But one of the priciest products offered will likely be the extended car warranty.

It is important to note that you have the option to purchase this auto warranty any time before the manufacturer warranty expires. You can even purchase an extended warranty after the manufacturer warranty expires, although the price will go up considerably.

You might already have asked the five questions that should precede the conclusion of a new car deal. But now it is time to ask yourself five extended car warranty questions. They'll help you decide whether this vehicle service contract is worth it, and they'll help you get the best price.

Before we get to the questions you should answer for yourself, here's one you'll hear from the finance manager: "Do you plan on keeping this car for a long time?" It's a common question, and it's worth your consideration. Do you get tired of a car by its third year? If so, paying for an extended car warranty doesn't make much sense since the manufacturer's warranty will still likely be in effect. But if you are someone who drives a vehicle until the wheels fall off, the extended car warranty might be worth considering. But how long you'll keep the vehicle isn't the only consideration. Here are five questions to think through before you decide.

Many dealerships offer third-party warranties from companies with varying track records. If you are going to purchase an extended car warranty, make sure it is backed by the automaker, not just the dealership or some other company. You can use a manufacturer-backed extended warranty at any dealership across the country. A third-party vehicle service contract might be good only at the dealership that sold it to you.

It's unlikely that an F&I manager will be willing to let you shop around on your phone while you're sitting at his or her desk with a pile of purchase paperwork between the two of you. This research is best done before you go to the dealer to finalize your auto purchase. If buying the vehicle is already a financial handful, you can shop for a better price on the extended auto warranty after the sale. Here's how to do that.

The F&I manager at the dealership at which you're buying the vehicle might say that the price of the extended car warranty is not negotiable. That might not actually be the case. If you check with other dealers, you'll find that some of them do have a lower asking price for the same product. Or they might be more willing to negotiate.

The only benefit to getting an extended auto warranty as you purchase a vehicle is the ability to wrap the warranty's cost into your financing. But unless you've shopped in advance and can negotiate a lower price for the extended warranty on the spot, this route could cost you more in the long run.

Have other cars you've owned had the kinds of problems that would have been covered by a warranty? If you are considering a road-hazard tire warranty, for example, think about how many times you've had a flat tire. If there is a lot of debris on the roads in your area or if you've had several flat tires in a short span of time, a road-hazard warranty may be worth looking into. But if you can't remember the last time you had a flat, you might not need the coverage.

You also can add up how much you have spent on out-of-warranty repairs in the past and compare the total to the warranty's price. For example, if you've paid $500 for repairs that occurred out of warranty, weigh that against the cost of the extended warranty. 041b061a72

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