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Last updated on September 11, 2021
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What Is an Extended Car Warranty?
An extended warranty can also be known as a vehicle service contract. It is an optional plan that can help you pay for the cost of certain repairs for your vehicle during your period of ownership. This is something people primarily are interested in if either they have bought a car with a fear of mechanical issues in the future, which could be expensive, or as an extension to the original manufacturer's warranty.
It is important to note that auto extended car warranty coverage doesn’t always cover everything, though.
What Does an Extended Car Warranty Cover?
You will have to be careful to look at the specifics of the warranty policy you may be applying for, as most warranties do not cover certain parts that the original factory warranty may have covered.
Extended warranties, for example, usually do not cover routine maintenance. Therefore, your annual service will not be a part of the warranty coverage or any new tires, brakes, etc. Any sort of roadside assistance is also not often covered.
When considering an extended car warranty, it is essential to look at the specifics of your chosen auto protection company. Each provider has a different list of items they will not cover with their policy.
Cost of Extended Car Warranties
There are two different instances you’re likely to buy an extended car warranty within. The first is when you buy a brand new car, and the dealer offers you a ‘deal’ to turn that three-year warranty into a five year. This is primarily a way for dealerships to mark up the cost and increase their sales profit.
The second likelihood is that your original manufacturer's warranty has just run out, and you would like to purchase some extra protection going forwards rather than risking paying the entire bill if something goes wrong with your car.
Coverage options with extended car warranties can vary drastically, and therefore the overall cost will too. On top of that, the plan coverage and cost will likely depend on the type of car you are driving. For example, a Toyota is going to be significantly lower cost than a Ferrari to provide an extended warranty for.
One of the biggest cost factors that individuals should consider is the deductible. It can be charged in two ways. Either the deductible is paid per repair or per warranty service visit. Why is this important to identify? Well, if a problem cannot be fixed in a single trip to the shop, then you may end up paying multiple deductible payments for one single repair.
Is an Extended Car Warranty Worth the Money?
The core benefit of an extended warranty is the potential money that can be saved if your vehicle requires a costly repair, as the warranty contract will hopefully cover it. Instead of paying for the entire cost, you would only be responsible for paying the deductible (if applicable), and then the warranty provider will cover the rest.
The intangible benefit of extended warranties is the peace of mind that it can give you, knowing that if something does, unfortunately, go wrong, then you won’t be in a position where you can’t afford to fix the car. Like car insurance or health insurance, we don’t like to pay it annually, but we definitely appreciate it if something goes wrong.
Whether or not an extended warranty is worth it is likely a case-by-case situation. Depending on both your financial situation, your current vehicle and how much of an issue it would be if your vehicle was taken off the road.
If you rely entirely on your car to get to work every morning and couldn’t do it without it, then the peace of mind that an extended warranty brings will likely be essential. In addition, if you own a specialty car that may tend to go wrong, it may be a smart idea, as the cost of the repairs over its lifetime may likely significantly outweigh the cost of paying for an extended warranty. If you do want to look into some potential auto protection services, then look into Select Auto Protect warranty services.