Is an Extended Car Warranty Worth the Cost?
Extended car warranties will cover vehicles after the manufacturer’s warranty has expired. You may be curious as to whether or not you should purchase one of these warranties or if it’s even worth the cost. To make the decision easier here is some information about these types of warranties and whether or not they’re worth the extra money.
What do they cover?
When you purchase a vehicle, you may be pushed to buy an extended warranty. You’re already going into debt and spending a large amount of money, but protecting your investment seems like a good idea, right? Well, sometimes. It’s difficult to answer this question with a definitive yes or no response.
First of all, you should understand that each extended warranty will cover different things. It’s up to the dealership or manufacturer to determine what exactly they want to cover. Some warranties may be backed by an independent company which can potentially make the whole process a little shady. This type of situation can result in not getting the coverage you’ve paid for, usually when you need it the most.
Under a breakdown warranty, coverage is extended only to the parts that physically break. Unfortunately, not all parts fail due to breakage. Some parts need to be replaced just because they have worn out. A timing belt or chain is an example of an expensive part that can fail due to normal wear-and-tear. You may purchase a wear-and-tear warranty to extend to worn-down parts if you are concerned about this issue.
Overheating, regardless of cause, is usually not covered by most warranties. So, if overheating occurs due to issues with a part, you may be out the cost of repairs. Some parts are extremely expensive, like the radiator, which can cost anywhere from $400 to $600 on average.
So why purchase an extended warranty?
When it comes to purchasing a new car, you should always research the reliability of the brand extensively beforehand. For example, you may find that Honda Accords tend to have a habit of transmission issues after a certain number of miles. You want a vehicle that is reliable, and the only way to do this is to research the car extensively. If you want to purchase a car, despite issues it may have, you should probably get an extended warranty. If you have your heart set on an Accord, you want to be covered in the case of mechanical failure.
Many experts will tell you not to shell out the extra money, as it may not be seen as worth it. Overall, you should consider whether the peace of mind is worth the cost. If you’re on the fence, a great alternative would be to save money from the time you purchase a vehicle. Put away $25-$50 per month that you would be spending on the extended warranty. Considering that most extended warranties last up to 10 years, you would have at least $3000 saved up after 10 years that would cover the cost of most repairs on the vehicle.
Most people may walk away without using their warranty. Around 55% of people who decide to purchase this extended warranty haven’t had to use it. The cost of coverage is usually around $1,200 while the cost of most repairs is a little over $800 on average. Different makes and models will have different prices. If you’re looking at an American brand, the repairs will be cheaper while most foreign models can be quite pricey. Know what may break down, if it’s covered by an extended warranty, and know the cost of repairs. Only then can you answer the question of whether or not the warranty is worth the price for you.