Answering ‘yes’ or ‘no’ to the question of whether you need
an extended warranty isn’t as easy as it should be. Add a few more layers like,
‘Which extended vehicle warranty is right for you?’ and the situation becomes
even more complicated. And guess what? There’s no right or wrong answer here.
Groan.
Luckily, the right questions can help you decide on which
side of the fence you stand. First and foremost, it’s important to understand
that this won’t be a cheap decision either way. An extended warranty can cost
anywhere from several hundred dollars to upwards of a $1,000, but repairs can
cost thousands when you are faced with the failure of a major vehicle
component, such as an engine or transmission.
So, how to choose? Let these questions help guide your
decision.
If the answer is ‘yes’ and the extended warranty is going to
duplicate coverage already provided by the original warranty, then adding an
extended warranty probably doesn’t make sense. A better scenario is an extended
warranty that kicks in once the original warranty’s terms and conditions
expire.
Do you trade vehicles every few years or drive them with
high mileage?
Today’s vehicles are more reliable than ever, lasting longer
with fewer mechanical issues than their predecessors. If you change vehicles
every two or three and rarely see the odometer reach 70,000 miles, an extended
warranty might not be the best decision. The odds of a major mechanical failure
occurring while the vehicle still has low mileage are just that – pretty low.
Who stands behind the warranty?
If the warranty is backed exclusively by the new or used car
dealer, it might limit you to having warranty work performed only at the
dealer, and it could leave you with little recourse should the dealer go out of
business. On the other hand, an extended warranty backed by the vehicle
manufacturer will give you more options, and peace of mind. Whether it’s
through the dealer, the manufacturer, or a private company, there are numerous
warranty providers available, each deserving careful consideration.
What does the warranty cover?
Read the fine print to determine what the warranty will or
won’t cover. Are warranty claims limited to just the drivetrain components or
is it a bumper-to-bumper warranty that covers everything? What about items that
need to be replaced due to normal wear, such as brakes? Many warranties
specifically exclude these items.
Warranty longevity usually stipulates either a timeframe or
vehicle mileage, whichever comes first. If a particular warranty won’t cover
the amount of time or miles you plan on putting into this vehicle, maybe it
isn’t the right one for you.
What is the claims process?
Hopefully, you’ll never need to file a repair claim under
your warranty, but just in case, it’s a good idea to familiarize yourself with
your warranty’s specific claims process and requirements. Here are some of the
most important things to consider, ideally before you have to file a
claim.
Many warranties require you to obtain prior approval before
having the repair completed. Oftentimes the dealership or repair facility can
obtain that approval while your vehicle is in for the repair, after they’ve
diagnosed the problem and determined that it’s a covered claim. Warranties
usually require a deductible to be paid as part of the claim. Find out if your
deductible is per item repaired or per visit. If it’s the latter
and you have several items that need to be repaired, you can save some money by
having them all taken care of at once. Before you go that route, however,
determine how they want you to pay for repairs. You will either need to pay up
front and be reimbursed by the warranty company or they will pay the repair
shop directly.
Also determine if the warranty limits the number of claims
you can file and/or cap the dollar amount of repairs. When it comes to choosing
where to have the work performed, the warranty could specify where the repairs
have to be made – leaving you unable to go to your trusted mechanic. Lastly,
it’s also worth checking to see if your warranty provides you with a loaner
vehicle while your vehicle is being worked on, and for how long.
Can you afford the warranty? Can you afford not having
the warranty?
This is a question of finances, both immediate and longer
term. If you don’t have the money available to purchase the extended warranty
with the vehicle, then consider setting up your own “vehicle repair fund.” Set
aside a specific amount of money each month and place it in this account to
cover future vehicle repairs. On the other hand, if you know there is a no way
you could afford a major vehicle repair, such as if the transmission fails,
then you should seriously consider purchasing the extended warranty. Oftentimes
vehicle dealers will roll the warranty purchase price into the overall vehicle
sale price and financing so you can avoid having to pay for the warranty
upfront in one lump sum.
If you don’t purchase the warranty, will you still be
able to sleep at night?
No one knows you better than you, and this could be the determining
factor, above all else, in deciding whether you need an extended warranty. Are
you a worrier? Does even the remote possibility of having to pay for a major
vehicle repair fill you with anxiety? Or, are you comfortable “rolling
the dice” by not paying for an extended warranty, gambling that the odds will
be on your side going forward and you won’t need a vehicle repair?
Before purchasing a vehicle, most buyers spend some time
researching which vehicle best suits their lifestyle and needs. The same effort
should go into deciding whether an extended warranty, or which warranty, is
right for you. The time to ask these questions and obtain answers isn’t when
you’re sitting in the dealership. Do your homework and sleep better at night,
knowing that when it comes to extended vehicle warranties, you made the
decision that’s right for you.
Article Credit: www.driverside.com
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