Why Factory-Backed Extended Warranties Are Best
These warranties are only available for sale through a franchised new car dealer.
They're usually more expensive than third-party warranty providers, but you won't have much hassle if you need repairs and you don't have to worry about them going out of business.
Third-party warranty providers can sometimes make it a hassle to get repairs done. They may force you to get multiple estimates, wait for approvals, and not pay the claims upfront, but rather reimburse you afterwards.
With a factory backed warranty, you simply take the car to the nearest dealership and they take care of everything.
To make matters worse, there have been several bankruptcies in the past involving third-party warranty providers. Foolishly, they had sold cheap warranties and didn't have enough revenue to cover all the repair expenses.
Unfortunately, the consumers who bought these warranties lost the service along with the money they had paid.
When buying a factory-backed warranty, make sure the dealer doesn't trick you into purchasing a third-party warranty (which can be more profitable for them). Always confirm and make sure it is factory-backed.
Finally, it's important to note that there are some exceptions when it comes to third-party warranty providers.
If you really want the best deal on an extended warranty, the best third-party providers are CarChex, Universal Underwriters, and CNA.
Universal Underwriters and CNA are available for purchase only through dealerships, while CarChex is the only online provider I recommend.
Each has a long history of providing good quality extended warranties. Usually, they're cheaper than a factory backed warranty but do come with a slightly higher risk so you should always compare rates and decide if it's worth it.
3 Steps Every Car Buyer Needs to Take to Save Maximum MoneyThe key to getting the best deal is to gather price or lease bids from as many local dealers as possible. Then shop that best price around until no one can beat it. Here are the steps:
Step 1 Get Prices From My Trusted NetworkSelect the vehicle you're interested in to see if there are local dealers in my network who will provide you with their best upfront price. You will get direct access to an internet sales manager who you can further negotiate with online (no need to visit dealership).
Step 2 Get Prices From TrueCar / CarsDirectTrueCar, and CarsDirect are my top 2 online price quote recommendations. These services show you pre-negotiated prices from dealers closest to you - and the deals are usually pretty decent. But remember, you can still negotiate further.
Step 3 Complete my ChecklistFollow this up with my checklist to make sure you squeeze out every last bit of savings.
- Gregg Fidan
Each week, I'll keep you up-to-date on the latest car deals and news that might affect your purchase. This includes...
- Best Rebates, Incentives, and Lease Deals
- Latest Car Buying Scams and Tricks
- The Best & Worst Time to Buy a Car
- Which Cars You Should Avoid