10 Extended Car Warranty Myths Explained
Purchasing a new car? Then, you’ll probably come across the term “extended car warranty.”
Cars, like all products, inevitably suffer from wear and tear. Needed repairs will most likely spring up after a few years. These can be very costly which is why people rely on warranties to help them handle repair and maintenance costs.
But various warranties all claim they’ll protect you in case something goes wrong. So, as a smart customer, you have to know which type of warranty is worth your dollar.
Is purchasing a warranty directly from the car dealer better than getting one elsewhere? Most importantly, how do you avoid being taken advantage of? This article clears up some of the most common myths regarding extended car warranties so you can get your best deal.
1. An extended car warranty is unnecessary
While your vehicle is still in good condition, you might not consider spending money on an extended warranty. But while your car is running smoothly now, issues will eventually pop up down the line.
If you wait until your car breaks down, it won’t be covered for problems assessed as “pre-existing conditions” similar to how health insurances work. This means that the best time to get your extended car warranty is before you’ll actually need it. So, if you care about protecting your vehicle and your wallet, invest in an extended car warranty early on.
2. Only a car dealer can sell a warranty
Yes and no, only registered car dealers can sell extended vehicle warranties but there are other providers that sell a vehicle protection plan. So, what’s the difference between the two, and which one should you be getting?
Vehicle protection plans are often a more affordable option and provide a lot of the benefits of an extended car warranty. There are also protection plans that come as no-fee payment plans and even cover a wider range of issues arising from normal product use.
It’s worth looking around to compare different providers to see which prices and plans will better suit your needs.
3. All warranties are pretty much the same
This is a common misconception for car owners and buyers. Before investing in a car, you have to look into the differences between the types of warranties so you can avoid headaches in the future.
Warranties differ when it comes to their coverage, features and benefits, and pricing, so it’s smart to do your homework to see which warranty you really need.
Warranties on the more expensive side typically come with additional coverage. There are also different coverage types depending on which state you live in, as well as your car’s year, make, model, and mileage.
Look into the provider’s reputation so that you have the confidence of buying from a trusted company. You can also ask for a free quote to have an educated comparison.
4. A manufacturer’s warranty enough
You might wonder if you need double coverage if you’re already covered by your manufacturer’s warranty. While a manufacturer’s warranty will cover you for a period of time after your purchase, the time and mileage limits run out quickly. You’ll most likely find yourself in a position where the problem will happen only after the manufacturer’s warranty has already expired.
You will get far better rates if you get an extended warranty plan just before your manufacturer warranty expires. When it comes to extended warranties, it’s cheaper to insure a newer car without any issues. You’ll get lower rates, better terms, and wider coverage when you buy an extended warranty before you need one.
5. Having an extended warranty means not having to worry about the car
While an extended car warranty will help you deal with expensive repair costs, you’re still expected to be a responsible car owner. Take care of your car according to the guidelines stated in your vehicle owner’s manual. Don’t postpone scheduled maintenance checks and always make sure to save records and receipts of your upkeep and repairs.
If you wittingly neglect your car, you may not be eligible to get paid for your claims in case a problem arises. Even if you have a warranty, you’ll also want to avoid the hassle of trips to repair shops. This is why being consistent with upkeep is still the best way to go.
6. An extended warranty is a requirement for dealer financing
The short answer is no. There’s no connection between buying an extended car warranty and getting approved for financing.
Qualifying for financing would depend on your credit history. Also, you don’t need to tack the fee for an extended warranty onto your car purchase so that you don’t end up paying more in interest. To benefit more in the long run, you can look into companies that sell extended warranties on interest-free payment runs.
7. There are no out-of-pocket costs
An extended car warranty does not mean you won’t have to shell out for some of the repair costs. A manufacturer extended warranty will still require you to pay a deductible. Additionally, a car covered by a manufacturer’s extended plan generally must be serviced at the dealership. Since they use factory parts for repairs, they come at a better quality and a higher price.
There are also other costly “surprises” such as having to call in an adjuster to confirm the repair diagnosis. This typically applies to repair costs that are more than a thousand dollars or those that require extensive work. Having an adjuster will cost more time and money on top of the diagnostic time for assessing the damage and costs for labor.
8. An extended warranty and an original manufacturer warranty cover the same
Nope! Extended car warranties don’t include coverage for maintenance. Tune-ups, coolant, wipers, oil changes, bulbs, brake and transmission flushes, and other items that get worn out like tires and brake pads are not covered. Meanwhile, an extended warranty will often cover the mechanical and electrical problems that are not included in the manufacturer warranty’s coverage.
To be sure that you’re purchasing the level and type of warranty you need, carefully review the service contracts. Don’t skip reading the fine print and don’t be afraid to ask them any and all questions so you know exactly what you’re paying for.
9. Wear and tear breakdown and mechanical breakdown warranties are the same
A mechanical breakdown is a defect in the car’s parts or a workmanship problem as it was supplied by the manufacturer. If the warranty only covers product defects and malfunctions, you’ll need to get wear and tear breakdown warranty as well.
As with most cases, problems happen because of gradual wear and tear instead of faulty manufacturing. This will become more of an issue over the years and as your mileage adds up.
Avoid making assumptions about the repair agreement covering your needed car repairs. Your best bet for covering many of the repairs your car will likely need is to go with service contracts that include wear and tear claims.
10. An extended warranty is a luxury
An extended warranty may feel like a luxury because of the extra cost. It can make you wonder if you’re being taken advantage of or being sold something you won’t need.
But if you’ve ever had a major repair, you would know how these often cost thousands of dollars. This is why you’ll probably get back the cost for your warranty with one major car repair bill.
Additionally, some extended car warranties come with helpful features such as roadside assistance when your car breaks down, different payment plans so that repair costs are more manageable, a replacement rental you can opt for while your car is getting repaired, and even the option to choose which repair shop to go with.
Shop around to find the plan that’s most worth your money.
Conclusion
Extended car warranties are like the health and life insurance. We all hope that we won’t need to collect on our policy, but when the unexpected happens, we want to be confident that we have coverage to protect us.
Just like all policies, it’s a must to do research to make sure you’re getting the most out of your hard-earned money. Never make any assumptions and make sure to read the fine print so you aren’t taken by surprise for issues not covered by your plan.
