Like an auto insurance policy, a vehicle protection plan is something drivers buy to help cover the cost of unforeseen car repairs. While everyone hopes they never have to use one, it’s a peace of mind that can provide security in the event the unexpected occurs.
However, there are a number of questions that must be considered before purchasing an extended warranty or vehicle service contract. What exactly is it, how much does it cost, and what are the benefits?
An extended warranty is a car protection plan that typically covers the cost of parts and labor for an additional period after the manufacturer’s warranty has expired. Typically, they have specific terms and conditions for coverage such as mileage and age limits. Some warranties even include roadside assistance, which could come in handy if your car breaks down.
The cost of an extended warranty can vary greatly depending on the length of coverage and vehicle components covered. Many car companies sell their own warranties, but independent third-party providers also offer them. Some may include extras such as prepaid maintenance or tire protection plans, while others only focus on the main parts of the vehicle that need to be repaired or replaced. Some providers also limit where you can take your vehicle for repairs, while others don’t.
Choosing an extended warranty provider is an important decision, as most policies have exclusions such as wear and tear or maintenance items like replacing brake pads. You should research the providers’ reputation and check out their contracts carefully to find the right extended car warranty for your needs.
Some drivers decide an extended warranty is worth the cost because of how costly it would be to pay for repairs out of pocket once the manufacturer’s warranty has expired. The extra expense can also give peace of mind for a used car buyer who doesn’t want to be responsible for unforeseen breakdowns.
There are about 18 million warranty claims made each year. While most are minor, some are very expensive such as engine or transmission failures. Some cars are more likely to break down than others, and an extended warranty can help reduce the risk of a major repair bill.
A warranty can be purchased either on its own or as part of the car loan, with the option to transfer it to a new owner should you choose to sell. Some warranties have a mileage or age limit, while others will only be valid for the vehicle as long as it is owned by the same person.
Those with highly reliable vehicles, low-cost repair costs, or savings set aside for vehicle repairs might not need an extended warranty. Other factors that could influence whether it’s worth it for you are the length of time you own the vehicle, how often you drive, and your budget. You should also consider the possibility that the company or dealership selling the extended warranty could go out of business, and if you’re comfortable waiting for reimbursement for covered repairs. extended vehicle warranty