Can Used Car Warranties Save You Money on Auto Repairs?

An extended warranty is meant to help cover the cost of car repairs when the original warranty expires. Given that many people are keeping their cars longer, then the need for an extended warranty is starting to get more attention. However, can used warranties save you money on auto repairs? Let’s find out.

What is an extended warranty?

Also known as an extended service contract, these warranties are an optional plan that you can purchase to cover the cost of major repairs for your vehicle when the manufacturer’s warranty runs out. While coverage usually starts when the original warranty runs out, there are some scenarios when extended coverage can begin before the manufacturer’s warranty ends.

One thing you want to keep in mind is that most extended warranties do not offer bumper-to-bumper coverage. Also, these policies are not meant to pay for routine maintenance or the replacement of tires, brakes, and other consumable items.

The best way to find out what the extended warranty you are considering does and does not cover, the best advice is to read the fine print. In this way to you can find out the details of the coverage and how it matches up to your expectations. It does not matter if you are seeking a Nissan Altima extended warranty or one for another model you will want to make sure you know how it will work before paying for it.

What is the cost?

When you buy a car, the dealer is likely to ask if you want to purchase an extended warranty. But the devil is often in the details as dealers are seeking to make money any way they can, and as such, you might want to check the costs of the dealer’s warranty plan before signing anything.

Balancing coins and a potato on a calculator

If you want to purchase the plan, then you might want to consider negotiating the price or check online to see what other options are out there. Keep in mind that coverage options can vary, and this will have a direct impact on how much you will pay. This includes the upfront costs, which can cost as much as $3,000.

There might also be a deductible tied to your extended warranty. While the idea of having a lower deductible might sound appealing, the reality is that this is probably not the best decision.

The reason is simple; extended warranties are meant to cover the cost of significant repairs. These repairs do not often happen, and as such paying extra to get a lower deductible just does not make sense. Hint, this also works for car insurance.

Instead, opt for a deductible that will cover about 30 percent of the expected repair cost. Doing so will decrease the value of your extended coverage while making sure you will not break the bank if you need to make a major repair.

Is an extended warranty worth it?

The truth is there is no one right answer to this question. In some cases, getting an extended warranty might not be worth the cost, while for others, what they want more than anything is peace of mind, and such getting the additional coverage makes sense.

A question mark and a maze

In the end, getting an extended warranty depends on how long you expect to keep your car. If you are planning to hold on to your vehicle for more than five years, then extending the coverage on the car might make sense.

Keep in mind that you will want to factor in the time remaining on the original warranty, what the extended warranty will cover, the cost, the service requirements, and other elements of the coverage itself before deciding what is right for you.

The Bottom Line

Getting an extended warranty could add to the cost of purchasing a car – either new or used. However, the decision to get one will depend on the age of the vehicle, how you will use it, and what makes you feel more comfortable.

The additional coverage is not just about the price tag. If you want to get the benefits, then you might want to consider taking a higher deductible, as this will reduce the overall cost of the policy.

Also, you might want to consider rolling the warranty into the financing amount for your car. But beware as this only works when you are financing your vehicle for 12-months or less. If you are getting a long-term loan, the do not roll the cost of the warranty into the financing amount as this will mean that you are paying for the warranty over the life of the loan and could impact you went it is time to sell or trade-in the vehicle.

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