Why You Should Buy An Extended Auto Warranty

Posted by Adrianna On July - 26 - 2013 0 Comment

First off, extended auto warranties certainly aren’t for everyone, but in certain circumstances they can be a great idea if you know what you really need and are educated on what you’re getting. First off you need to just realize that an extended warranty is a money maker in general. Manufacturers make more than 50 percent margin on warranties.

Why is that? Well, primarily because most well built cars won’t need extensive repairs. It’s well worth doing your research on a used car to see what types of repair become common as the car gets older. Increasingly you need to be aware of what specifically is covered in your extended warranty.

The most important thing you can do when looking at an extended warranty is finding out what isn’t covered. Read it thoroughly and know very clearly what counts as “maintenance” which won’t be covered. Getting back to the earlier point, if you know your car has issues with the brakes as it gets older (for example, late 1990s Grand Prixs often had these issues) you’ll want to make sure that your extended warranty covers brake issues.

The other thing to think about, particularly when putting an extended warranty on a used car is the value to replace the car. You may love the car, but if the value to replace it is relatively low, you’ll want to be careful how much you put into an extended warranty. The general rule of thumb experts will throw out at you as never go over 10% of the car’s purchase price when buying a plan.

Be aware that you don’t need to purchase from the dealer

There are many reputable sites online that offer car warranties (autowarrantyone.com comes to mind), and you can often get better deals if you do some homework. You can even find manufacturer certified warranty providers at other dealerships’ websites if you’re so inclined. A simple Google search should put you in touch with any number of legitimate affiliates. Check out reviews from independent sources and see what you find out there as well. You don’t need to be in too big of a rush unless you’ve really purchased a lemon (which likely means there’s no extended warranty that can save you).

At the end of the day, you just need to do your homework. An extended warranty’s not always a great purchase, particularly for highly reliable cars or those with a low replacement value, so don’t get pressured at the dealership into making a rash decision.

Image courtesy of http://www.flickr.com/photos/wireheadinc/

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