Many car owners are wary about extended car warranties. They don’t think it is practical to buy an extended warranty when they haven’t even begun using the original warranty. Contrary to the belief that these warranties are scams, plenty of reputable extended car warranty companies are worth your money. These companies can provide the best coverage at the car owners’ most affordable price points. They even customize the scope of the coverage so that owners can maximize their money’s worth.
What Is Extended Warranty for Cars?
Car buyers want reliability. A whopping 95 percent of brand-new and used car buyers place reliability at the top of their must-have list. But knowing that the car is reliable is not nearly enough. Buyers also want financial protection from unforeseen circumstances that force them to do extensive repairs and replacements.
That is what an extended car warranty is for. The warranty offers a certain level of protection, depending on the coverage, so that car owners won’t worry about future car problems. This kind of warranty usually comes with purchasing a pre-used car, although some new car owners also buy it for additional protection.
Also known as a vehicle service contract, this kind of warranty is optional. You are not forced to pay for an extended car warranty when you buy a brand-new or used car. However, it helps shoulder the costs of future repairs and replacements, especially if you don’t always have thousands of dollars lying around.
Can Extended Warranties Be Scams?
Some extended car warranties have a bad rep because of unfavorable reviews and comments. The one thing that pushes consumers away is the price. These warranties are more expensive than the manufacturer’s warranty. Each policy can be priced from $90 a month to $170 a month. The coverage varies with the monthly fees.
With this amount, some car owners believe they could’ve saved enough money to cover all kinds of repairs and replacements. Remember that extended car warranties do not necessarily cover everything that could go wrong. People also complained about never using these warranties during the cover period.
However, it doesn’t mean an extended car warranty is a waste of money or a bad idea. The warranty is a form of consumer protection and not to ensure you’re getting your money back. It is still a great thing not to be able to use the warranty because it meant your car didn’t need major repairs. The point of the extended car warranty is to offer protection once the manufacturer’s warranty has ended.
So, is it a scam? Hardly. While no warranty coverage is perfect, an extended car warranty offers what is being asked from it: financial protection.
Understanding the Coverage
Admittedly, some car owners fall into the trap of too-good-to-be-true extended warranties. They pay $50 or less every month only to find out that a cosmetic repair is not included in the coverage. Check the list of coverage before signing your name on the contract. Car owners shouldn’t assume a warranty or insurance protects them. They need to know the level of protection they can expect.
The extended warranty can cover the powertrain, electrical components, transmission, air-conditioning, engine, and other systems. However, it does not cover routine maintenance, such as changing the engine oil, brake pads, wiper blades, transmission fluids, bulbs, and many more. Car owners often mistakenly think the extended warranty can be used for preventive maintenance.
Reading the Fine Print
Once you sign the contract, make sure you understand the scope and limitations of the agreement. While many extended warranties are straight to the point, some will hide fees, charges, and exclusions in the fine print. Make sure you read it thoroughly to be ready for whatever comes your way.
Even after successfully negotiating the terms of the agreement, it behooves anyone to ensure the discussions are aligned with what’s on the final contract. Knowing the facts before you buy and eventually use an extended warranty will prevent that feeling of being ripped off. Do not ever sign a document without first understanding what you’re agreeing on because this is irrevocable.
Worth the Money
An extended car warranty is not a scam, but is it worth the money? The answer always depends on what you expect from it. Deliberately breaking something in your car to use the policy is not a good nor practical idea.
But if your goal is to have peace of mind, to be confident of your capacity to maintain the car, then, yes, you will get your money’s worth with an extended car warranty. Knowing that you have some protection from the high cost of auto repair will keep worries away.
Imagine having both comprehensive car insurance and an extended warranty. You’ll only shoulder the deductible (if you have one) instead of paying for the total cost of the service. While people don’t necessarily like paying for intangible items, a warranty should be an exception because it removes the stress of worrying about car repairs.
It is easy to see why some people think an extended car warranty is a scam, but it is not. Most people want to quantify their purchases. They want them to be tangible, but a warranty is not like that. Instead, it protects probably one of your life’s most significant purchases—a car. It moves you away from falling into debt when your vehicle needs a major repair. And at night, it helps you sleep knowing you’re investing not only in your car but also in your mental and financial well-being.