Extended warranties, worth it?

Extended warranties are now a part of the car buying process. In the search for extra profit, dealers offer them for every customer, new and used. On the surface, having a warranty seems like a great idea but there are differences in the warranties themselves and what they cover. And do you even need a warranty?

Let's talk about the differences in warranties. There are basically two kinds, one offered by the manufacturer of the vehicle and one offered by an aftermarket company. The ones typically offered by the car manufacturer are usually better. Dealers will sell the aftermarket ones to increase their profit as they are usually cheaper. If you do decide to buy a warranty, ask only for that car maker's warranty. IE if you're buying a Ford from Ford, you would want a Ford warranty. This obviously doesn't apply if you're buying a used car from someone who sells a different brand or is a used car store exclusively.

The aftermarket warranties can be just as good if not better than the car makers warranties, but this is usually not the case if they have the option to sell both and are offering you the aftermarket one.

There are differences in coverage with every warranty. From a basic power train to a bumper to bumper. In my experience, the things excluded always seem to be the things that break. The advice I give is to get the highest level of their warranty or don't get one at all. Where you can save money is deductibles, as I would never suggest a $0 deductible. $100-$200 is a very reasonable deductible and is a fairly easy price point to handle if something does go wrong. That deductible will lower the cost of your warranty quite a bit.

Now, do you even need a warranty? If you're buying a new car, or even a newer used car, probably not. Even bad cars today are good cars. For example, one of the worst rated car in consumer reports last year was the Honda Civic. The Honda is a great car, reliable and sensible. But since all cars are good, winners and losers are measured by the smallest of differences. Any newer car can run 250,000 miles with just basic maintenance.

But, what if you're buying an older car or a vehicle with higher mileage? It seems pretty obvious, but this is the point I suggest it. When you're buying a car with higher mileage, the previous owner's maintenance record is unknown and the reliability of the car will be questionable based on that fact.

So if you decide you do need a warranty, just make sure you know exactly what you're buying and make the most informed decision you can about your purchase

#warranty #finance