Trying to decide if you should get an extended auto warranty? What exactly are they anyway? Read on to get answers to many common questions.
What are Extended Auto Warranties?
Extended auto warranties are service agreements that cover the cost of certain repairs—but only after the warranty from the car’s manufacturer expires. Extended auto warranties come in all forms. Some include more repairs, others are less flexible, and some have deductibles. There are extended auto warranties for every need.
Who benefits from one?
Customers who want to keep their cars at least five years stand to benefit more from than those who don’t see themselves keeping the car beyond three years. And depending on how well the car holds up, a customer may never need to use an extended auto warranty. It depends on how much peace of mind a customer needs.
What should an extended auto warranty cover?
Any adequate extended warranty includes arrangements for transmission, electrical systems, anti-lock brakes, clutches, power steering parts and air conditioning. The fine print explains what is and what is not covered. There are often increasing warranty levels. Each level increase covers more but for a higher price.
Warranties backed by car manufacturers
Extended auto warranties are usually backed by car manufacturers or by third parties. Both choices have their pros and cons.
Extended manufacturer warranties can be purchased right at the dealership and arrange for car repairs at any of that manufacturer’s dealerships or franchises. Factory-trained repair people service the car using factory parts, and a major advantage of this type of warranty is that approval is quicker and less complicated than with a third-party warranty. Manufacturer warranties also provide more peace of mind because dealerships generally offer more permanence than third-party groups, some of which go out of business and leave the warranty holder out of luck.
However, if an authorized shop or dealership isn’t near where a customer lives or where a car breaks down, finding a place to repair the car can take an inconvenient amount of time.
Warranties backed by third parties
Extended third-party auto warranties are usually cheaper/better priced than manufacturer warranties, although they do vary more in their terms. Some third-party agreements will pay for repair work at the car’s dealership; some won’t. Because there is more of a selection in repair shops, drivers who are out of town or who unexpectedly break down may have more luck finding a place to service their car than those with manufacturer warranties.
In most cases, no matter the repair shop, a third-party warranty company must approve the work to be done. Some agreements may call for the car’s owner to shoulder the repair costs and then submit an invoice to the warranty company. Try to avoid warranty companies that won’t directly pay the repair station.
While a good number of third-party warranties do provide assistance that is equal to manufacturer warranties—and for a better price—it may take time and research to dig up these gems. Endurance Warranty is on of the best in the industry. They are accredited by the Better Business Bureau and are certified by the Vehicle Protection Association.
Some customers are able to buy third-party warranties at the car dealership. Some may even do it unknowingly, so it’s important to ask who backs a warranty bought at a dealership. Good tip: Investigate a third-party company’s claims history. Does the company tend to fight claims? Endurance, for example, has over $25,000,000 paid in total claims.
Some extended auto warranties come without deductibles, but these tend to cost more. There are two kinds of deductibles: per repair and per visit. Per-repair deductibles should be avoided if possible because they could apply to a repair and any subset of it (every tiny part fixed or replaced even if they are under the umbrella of the same problem and taken care of during the same visit).
When to buy an extended warranty?
Customers can buy extended auto warranties anytime as long as the manufacturer’s warranty has not expired.
The best warranties do the following:
- Pay repair shops directly
- Have no deductibles or per-visit deductibles (as opposed to per-repair deductibles)
- Cover common repairs
- Explain the warranty terms in clear language
Please Note: A Vehicle Service Contract is often referred to as an “extended auto warranty” but it is not a warranty. It provides repair coverage for your car after the factory warranty expires. Service contract is a contract between you and a company that lists covered repairs.