The purchase of an extended warranty is like any other big purchase. It comes with plenty of pros and cons, and figuring out which one is right for you can be quite a challenge. There are so many different types of extended car warranties out there that it can be overwhelming for anyone who’s not familiar with all of the details. Luckily, we’ve outlined everything you need to know before purchasing one so you don’t experience buyer’s remorse later on. If you’re in the market for an extended warranty, read on for everything you should know before making your decision.
What is an extended car warranty?
An extended car warranty is a type of service contract that covers the cost of repairing your car in the event that it breaks down.Unlike regular vehicle maintenance, which focuses on keeping your car running smoothly and preventing breakdowns, an extended car warranty focuses on repairing your car in the event that it breaks down.Depending on the specific type of warranty you purchase, the coverage can vary greatly. Some extended car warranties will cover the full cost of repairing your car, while others will only cover a certain percentage of the bill (usually referred to as a “deductible”).
The benefits of extended car warranties
There are plenty of benefits to purchasing an extended car warranty. First and foremost, you’ll be protected from the financial strain of having to pay for costly repairs out of pocket. Beyond that, an extended warranty may also help you save on your monthly car payment.If you’re under a long-term car loan, an extended warranty could help you save a considerable amount of money on interest. The amount saved will depend on how much your insurance premiums increase due to a broken-down car.
When should you purchase an extended car warranty?
While there is no exact time when you should purchase an extended car warranty, there are a few reasons why you may want to consider doing so sooner rather than later.The first reason is that the longer you wait to purchase an extended warranty, the fewer potential benefits it will offer you. The second reason is that if you skip out on purchasing an extended warranty and then have to pay for repairs out of pocket, you’ll have less of an opportunity to negotiate a lower price.For example, let’s say you break your car’s tire while driving on a remote road and have to replace it. If you have an extended warranty that covers tire replacements, the repair shop will likely be willing to repair the tire for a lower price. If you don’t have an extended warranty, however, the shop may charge you double what the tire should cost, or even more.
How much coverage do you need?
One of the most important factors to consider when purchasing an extended car warranty is how much coverage you actually need.The average car costs around $10,000 to replace. So if your car breaks down and needs a new engine, air filter, brakes, seatbelts, and more, that’s likely going to set you back about $50,000. If you don’t have an extended warranty covering those repairs, that’s a considerable amount you’ll have to come up with out of pocket. If you decide to purchase an extended warranty, there are three different types of coverage you can purchase:
- Full coverage
- Limited coverage
- Hybrid coverage
Full coverage is a type of coverage that covers the full cost to repair your vehicle. You’ll likely want this coverage if your car is in great condition and has never broken down.Limited coverage is a type of coverage that covers the cost of repairs up to a certain limit. If your car breaks down and needs a new engine, you likely don’t want to pay for the entire cost of that repair. Instead, you want a limited coverage plan that only covers a certain amount of repairs.
Hybrid coverage is a type of coverage that covers the cost of repairs up to a certain limit, but also includes a percentage of the cost of your car’s maintenance. This coverage is often found in car insurance policies, but you can also purchase it as an added bonus on an extended car warranty.
Which extended car warranty is right for you?
Now that you know what you should be looking for in an extended car warranty, it’s time to figure out which one is right for you.We’ve outlined some of the most common types of extended car warranties below.Which one sounds like the best fit for your situation?
The purchase of an extended car warranty is like any other big purchase, and if you’re not careful, you could easily end up paying for something you don’t need.Before you make any decisions about purchasing an extended car warranty, make sure to do plenty of research and compare different plans so you don’t get stuck with a contract that you don’t need.