A new car extended warranty or vehicle service contract covers certain repairs and typically lasts for a specific timeframe or mileage limit. Some warranties may include a deductible.
The cost of the plan can be significant if it’s rolled into an auto loan. Ramsey suggests checking to see if the warranty will ever pay for itself and considering alternatives, such as creating an emergency fund or buying a car with better-than-average reliability.
Cost
The cost of a new car extended warranty can vary widely. The amount you pay depends on what the plan covers and how long you want coverage to last. The price can also depend on how you use the vehicle. You should compare a few plans before making a decision. You should also look at the terms and conditions carefully to ensure that the warranty meets your expectations. You can also ask the dealership to negotiate the price of the plan.
A good extended warranty provider should offer a comprehensive package that includes parts, labor and deductible. They should also have a good reputation for customer service. You should also look for a company that offers a guarantee in case of buyers’ remorse. In addition, you should avoid a warranty that overlaps with the manufacturer’s factory warranties. This can end up being more expensive than it should be. You should also avoid a plan that requires you to visit specific service providers.
Coverage
Many warranties require that vehicle owners provide proof of regular maintenance to avoid denial of coverage. This includes providing copies of service records for oil changes and other items. Providing this documentation also reduces the likelihood of the warranty company raising deductibles in the future.
It’s important to compare the various available plans and features before making a decision. Some extended warranties only cover a specified number of repairs, while others cover all parts of the vehicle. It’s also worth considering the length of time and miles covered.
A new car extended warranty can be an expensive investment, so make sure to research the provider thoroughly. Some companies have a reputation for overcharging, while others are more transparent in their pricing and offer excellent customer service. A good example of a company with a positive reputation is Olive, which offers a variety of plans for new and used vehicles. They also feature a simple, user-friendly website that makes comparing coverage levels easy.
Limits
Many new car buyers are offered the option to purchase an extended warranty at the dealership. While this can be a great way to save money on repairs, it is important to understand the limitations of these warranties before you decide to purchase one.
Manufacturer warranties typically cover vehicles for a set timeframe or mileage limit. Extended warranties are designed to cover repair costs for an additional period of time or miles. However, they are often more expensive and may not cover everything that could go wrong with a vehicle. In fact, according to Consumer Reports, 55% of people who buy extended warranties never use them and end up with no financial return on their investment.
You can find a number of third-party providers that offer extended warranty plans for cars with over 100,000 miles. Some of these providers offer bumper-to-bumper coverage, which is an extensive plan that covers nearly every mechanical breakdown except for a list of exclusions. Others have more basic plans, such as a basic powertrain warranty that covers the engine, drivetrain, and transmission.
Requirements
If you’re shopping for a new car, deciding whether to purchase an extended warranty will depend on your personal needs. It’s important to do your research on these warranties before you head to the dealership, as you can save money by avoiding extra fees and negotiating with dealers.
Some types of extended warranties, such as bumper-to-bumper plans, cover most of the vehicle’s major systems. Other providers offer additional perks, including roadside assistance and rental car coverage. Some even include free tire replacements, key fob repair, entertainment vouchers and more.
However, not all extended warranties are created equal. It’s a good idea to compare prices and terms between reputable third-party companies and the manufacturer. A warranty backed by the manufacturer is typically cheaper than an aftermarket warranty. It’s also important to decide whether you need the warranty in the first place. Unless you’re purchasing a used vehicle that’s already out of warranty, buying an extended auto warranty isn’t necessary for most buyers.
