Should You Buy an Extended Warranty?
It covers the cost of repairs, parts, and labor on your vehicle after the manufacturer's warranty runs out. Some also offer roadside assistance and other benefits. Keep in mind they don't cover normal "wear and tear" items such as oil changes, brake pads, belts, mufflers, etc).
Most manufacturers already provide a 3 year/36,000 mile bumper-to-bumper warranty, with some brands such as Kia offering up to 5 year/60,000 mile protection. You will only want an extended warranty if you will be driving the car beyond the bumper-to-bumper warranty.
You can usually buy an extended warranty on a new vehicle within 1 month or 1,000 miles before the expiration of the manufacturer warranty. If you miss this deadline, you can still buy an extended warranty, but they will charge you based off used car prices which are a little more expensive.
Extended warranties come in a variety of options and terms, including different lenghts of coverage, mileage allowance, and deductibles ranging from zero to $250.
Most car manufacturers offer them through dealerships, but you can also buy them via independant companies such as CarChex.
The manufacturer-backed warranties are usually more expensive, but the advantage is that they're essentially guaranteed. 3rd party warranty providers have gone out of business in the past, and as a result, customers have lost their warranties along with payments.
To give you an idea of cost, extended warranties usually sell for between $400 and $2,500 for up 3 years (or 36,000 miles) of additional coverage.
Prices are NOT set in stone and can usually be negotiated with deep discounts off the asking price.
In most cases, you can cancel the warranty at any time for any reason, and receive a pro-rated refund for the amount you didn't use (minus some fees). You can also transfer the warranty if you sell the car to a private party.
If you cancel within the first 30 days, most providers offer a full 100% refund.
Don't buy an extended warranty if you're going to lease a car, or if you don't plan on keeping the car beyond the bumper-to-bumper protection.
Otherwise, extended warranties are usually one of the few extras that are worth considering - especially if peace of mind is important to you.
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- Gregg Fidan
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