Extended warranties add extra time to factory warranties. They typically kick in when a factory warranty runs out, hence the term “extended warranty.” Car dealers often suggest extended warranties because they provide customers with the security that future repairs are covered long after the sale date. On the face of it, this seems like a winning proposition but some will argue that the probability that you will need the coverage is low, at least with some products? If that’s the case, the “anti-extended warranty” folks will suggest that it might be best to save your money. Lets take a closer look.
Extended Warranty Pros
As our friends at Mr. Ed of Phoenix, AZ, point out that if you plan to keep your vehicle past the expiration of the factory warranty, an extended warranty can buy you piece of mind. Although this will cost you additional money, you will almost certainly be able to fold the payments of the warranty into your monthly payments. Boiling it right down, extended warranties eliminate the risk that you will get socked with a big repair bill in the future. For many people, this is a secure feeling.
Extended Warranty Cons
Some will argue that there are a couple of downsides to extended warranties, as well. First, having an extended warranty gives you piece of mind, but if you never need it, “why buy it.” Why not take that additional money you save and invest it elsewhere.
Second, an extended warranty might not cover the same items that the factory warranty does. This can be especially true with third-party extended warranties. If you are considering the purchase of an extended warranty, make sure to reallt check out what is covered.
The Company behind the Warranty
If you are considering an extended warranty, another detail to look at is the company behind it. Are they a good company that has been in business for a while? In some cases, the insurance company is the manufacturer themselves. In this case, is usually going to be a good warranty because there is a major name backing it up.
Factor the Factory Warranty into Your Decision
As we mentioned above, some argue that given the increased reliability of modern vehicles, purchasing an extended warranty isn’t absolutely necessary. That’s especially true if the warranty offered from the original-equipment manufacturer is quite long to begin with. Take Hyundai, for example. Hyundai offers a 5-year/60,000-mile bumper-to-bumper warranty and a 10-year/100,000-mile powertrain warranty. This is a nice long warranty.
There is no right and wrong answer to the question of whether you should buy an extended warranty. Do your research and decide whether the piece-of-mind that it may buy you is worth the price you pay. Good luck!