How Much Should You Pay For Extended Protection?
Extended car warranty plans are a great option to help cover expensive repair expenses. Many providers will also offer additional benefits like roadside assistance. The best thing about it is that you only need to pay your deductible when you need to get your car serviced. But how much should you actually pay for an extended car warranty? Let’s take a look at the different factors that affect the price of extended protection.
Factors that Affect Cost of Warranty
Firstly, prices will vary for every provider. Each warranty provider will have its own set of requirements and criteria to determine the price of your plan. The following are the most common factors that affect the cost of your warranty premium:
Type of vehicle
Luxury cars have a higher premium because it costs more to repair or maintain than a normal SUV. BMW, Jaguar, Mercedez Benz, and Audi are the type of vehicles with expensive premiums. A Ford, Honda, Chevrolet, or Toyota is relatively more reasonably priced. The highest coverage for a 2011 Toyota Corolla with accumulated 45,000 miles is $1,900. If you get this same type of coverage for a 2010 Mercedez Benz with more than 80,000 miles, you need to pay $2,950.
Vehicle condition
Some providers will only cover vehicles that fall under a certain age or number of accumulated miles. Warranty providers can charge higher premiums for vehicles with more mileage or just generally older. It will be a challenge to find a provider for vehicles with more than 150,000 miles.
Type of Coverage
A more comprehensive plan will definitely be more expensive than a minimum coverage plan. One thing to note is that most providers will offer at least three different levels of coverage and you should compare each one to find which suits your situation the best. There are policies that only cover electrical systems if you get the highest coverage. Since these parts of the vehicle can be quite costly to repair, it does make sense that you need to pay more for them.
There are also two coverage types you need to know – inclusionary and exclusionary. Inclusionary plans will only cover parts that are listed in the policy while exclusionary plans will cover every vehicle part except the ones listed under the policy exclusions. An exclusionary policy is typically more expensive since it provides more comprehensive coverage.
Deductible
The deductible is the amount you need to pay before the warranty provider covers the remaining balance. Policies with a lower deductible lead to higher premiums while those with a higher deductible usually have lower premiums. Similar to car insurance, extended protection deductibles range from $100 to $500. You can find plans without a deductible but you’ll have to pay higher premiums.
Knowing how these factors affect your premium will help you understand why providers give you different quotes. Although we can’t say exactly how much you need to pay, the cost of an extended car warranty usually falls between $1,050 and $3,970.
It looks like a huge amount, but consider the fact that this will pay for coverage that can last up to 5 years. If you can complete the payment early, you can enjoy the benefits of the policy without having to deal with monthly premiums. Another factor that makes policies expensive is the cost of repairing vehicle parts. Some repairs could go higher than $1,000 especially if it’s a major vehicle part.
How to Get Better Rates for Your Policy?
Finding the best deals for your extended protection is always the goal. To achieve this, you need to know when to buy a plan, where to purchase a plan, how different providers compare, discounts offered, and how you can get a lower price.
When to buy
Many car owners get their extended protection when the dealership offers to add the extended policy cost to the vehicle’s financing. This is a popular option because car owners can pay for the plan monthly instead of a huge lump sum if they purchase later on. What many drivers miss is that the extended protection can still be financed even after the vehicle is purchased. Extended car warranty providers usually offer financing without additional fees.
Where to buy
As mentioned earlier, you can get an extended car warranty plan from a car dealership or from a warranty provider. Car dealerships usually offer the policies at more expensive rates which could lead to you paying additional hundreds of dollars. Try to find different providers and see which ones have better rates.
Shop around
You can use independent websites to compare the rates and features offered by different warranty providers. These kinds of tools help you get a better idea of how much you’ll need to pay if you choose provider A over provider B and what benefits you’ll get from their policies. Knowing the average rates will also help you leverage a better deal for your plan.
Research discounts
Companies will not always offer discounts explicitly but it’s good to know that they can offer these to their customers. First-time policyholders are usually offered discounts as well as senior citizens and military members. Ask your agent what discounts you’re eligible for to save money on your policy.
