There’s an old saying in the auto industry, “They All Break” — and it’s true, regardless of make or model. So, it’s very tempting when purchasing a new or used car to buy an extended warranty from the dealer. But should you?
Here are some things you need to know.
Cars, Breakdowns, and Warranties
Unfortunately, when it comes to our vehicles, they always seem to break when they’re out of warranty. That means fat out-of-pocket expenses.
With economic uncertainty many people are holding on to their vehicle for longer than usual and even with proper maintenance, expensive repairs are inevitable. Data shows that two of the most common big-ticket items to go are transmissions and air-conditioning. The average cost of replacing a transmission is now over $2000 and the average cost for a major air-conditioning repair is now over $700.
But dealing with auto repairs doesn’t have to be a nightmare. The recent growth in extended and after-market warrantees now gives consumers a good way to protect themselves from large and unexpected auto repair costs.
Today, there’s little doubt that extended warrantees do save you money in the long run
But consumers should be extremely careful when purchasing an extended auto warranty. It’s very similar to buying auto insurance and there are a few key questions you should always ask:
- What is the deductible? As with insurance, warranties can include deductibles that will have an impact on the price. Chose a deductible that makes sense for you and be sure you understand if the deductible is applied on each repair separately or just the first repair.
- What are the labor rates the warranty reimburses for? Do they seem reasonable for your preferred repair shops? Do they pay the repair shop directly, or do you need to pay and wait for reimbursement?
- Exactly what is covered under the warranty? It’s better to have
one that clearly lists what is not covered (exclusive) rather than what is covered (inclusive).
- Have you read the full agreement? Make sure you do so before signing.
- Most importantly, is the warranty provider reputable and financially secure? Will they be there when you need them to pay off?
With dozens of companies now selling extended warrantees, how do you find the right one for your particular needs?
If you’re purchasing through a reputable dealer and go through their plan, you’re pretty safe. There are also online services that let consumers quickly shop for the best rates from a nationwide selection of extended warranty providers all competing for your business. However, before signing up with anyone, type in that company name and “reviews” on Google to see what comes up. If they are shady in any way, it will be revealed.
So, before your transmission falls out and you have to blow your vacation fund on a new one, find out just how easy it is to get some protection and peace of mind.