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Guide to Extended Car Warranties

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What Are Extended Car Warranties?

Extended car warranties are policies that provide you with protection against certain issues your vehicle may experience after the manufacturer’s warranty has ended.

extended car warranties

In other words, it’s a type of policy that reduces your liability to foot the cost of vehicle repairs in a similar manner to car insurance, though there are some key differences.

An extended car warranty will usually only kick in once the standard manufacturer’s warranty expires, though this isn’t always the case.

These policies are usually purchased from a car dealer, the auto manufacturer, or a third party and they can be well worth the money.

There are several different types of extended car warranties, each with varying coverage levels and associated costs.

It’s important that you carefully evaluate the different options available to you instead of merely purchasing the one which offers the most coverage, as it may be an unnecessary expense.

How Much Do Extended Car Warranties Cost?

As mentioned, there’s a lot of variation in the cost of an extended car warranty. The price is dependent on things like the level of coverage you’re after, how expensive your car is, and how many years of additional coverage you’d like to purchase.

Broadly speaking, you should expect to pay anywhere from $300 to $1,500 per year of coverage. Expect to pay more if you have quite an expensive car or if you want a policy with a $0 deductible (this essentially means you don’t have to pay anything towards repairing the problem, as long as the warranty covers it.)

Instead of trying to estimate how much you’re likely to pay by yourself, you should figure out what type of coverage is best for you and then get a few quotes for you to compare. Then, you can determine whether or not buying an extended car warranty is likely to be of benefit to you.

What’s Covered by an Extended Car Warranty?

The exact coverage provided is dependent on the type of extended car warranty. However, in almost every case, these warranties don’t cover the cost of repairing a known defect (the manufacturer will typically take care of this via a recall), nor do they cover damage to the interior or paintwork.

Types of Extended Car Warranties

Bumper-to-Bumper Warranties

A bumper-to-bumper warranty is the most comprehensive (and consequently the most expensive) extended car warranty out there. It covers almost everything, except repair work required as part of the standard maintenance of a car.

This extensive coverage is excellent for people who want as much coverage as possible and are happy to pay the high annual fee even if they do not use the warranty, as they simply want peace of mind.

Powertrain and Drivetrain Warranties

A powertrain warranty covers damage related to the engine, gearbox, and any other component of a car’s powertrain. In contrast, a drivetrain warranty covers repair works’ costs to the transmission and a few other components, but not the engine.

Understandably, powertrain warranties are therefore considerably more costly than drivetrain warranties, but they can be worth it, as repairing engine damage can be pretty expensive.

Also, it’s important to keep in mind that such policies rarely cover the cost of standard maintenance, so you will still be responsible for paying for oil changes and regular engine checks.

Anti-Perforation Warranties

An anti-perforation warranty exclusively covers the cost of repairing the damage inflicted due to your car’s metal body corroding. If you’re solely concerned about corrosion leading to expensive damage on your vehicle, this is just the warranty for you.

Used Car Warranties

A used car warranty includes any type of warranty (including all of the above), which provides coverage for a second-hand vehicle. Buying an extended car warranty for a used vehicle is a bit more complicated, and it’s imperative to conduct your due diligence and take a good look at the car’s history and its current state.

Also, you should bear in mind that many used cars don’t qualify for an extended warranty. A used car typically won’t be eligible if they have a lot of mileage on them (it typically starts to be an issue once they’ve racked up around 30,000 miles) or are in poor condition and therefore need immediate maintenance or repair works.

Benefits of Extended Car Warranties

The main benefit of an extended car warranty is, should your car get damaged and need costly repair work, it will cover all or most of the cost of getting it fixed.

Even if your car doesn’t sustain any covered damage over the term of the extended car warranty, it still provides peace of mind, so it’s not a complete waste of money.

Drawbacks of Extended Car Warranties

There are quite a few potential drawbacks of extended car warranties:

Limited Coverage

Unless you buy an expensive bumper-to-bumper warranty, you’ll still be exposed to the cost of damage to your car’s many components, which aren’t covered by the warranty you’ve purchased.

And, as it’s impossible to know what component will get damaged and will require repair. It can often be very tricky to decide which particular type of extended car warranty is best for you and if it represents good value for money or not.

Lack of Usage

Some people spend thousands of dollars on an extended car warranty but never end up making a claim on the policy, so, in a way, that money has been wasted.

However, as mentioned, a warranty still offers some benefit even if you don’t need to use it, similar to how car insurance provides peace of mind even if you rarely use it.

Requirements

As we’ll discuss later on in this guide, there are often many requirements which you must meet to prevent your extended car warranty from being voided. It’s quite easy to get caught out – paying money for a warranty and then needing it only to find out it has been voided is a nightmare scenario for everyone.

Overlap

While you can shop around to find an extended car warranty that matches your individual needs, there may still be some overlap with the existing, standard manufacturer’s warranty, so you’ll be paying money for something that’s already covered.

Things to Consider When Shopping For an Extended Car Warranty

There are many things to consider when shopping around and deciding exactly which extended car warranty is best for you.

Price

As an extended car warranty is a significant purchase, it’s well worth shopping around to find one which offers the best value for money. You should also consider if the cost of an extended car warranty is likely to be greater than the cost of repairing the damage covered under the policy.

For obvious reasons, it’s impossible to predict how much damage you’ll need to be covered under warranty, if any. However, it’s still worth running a few calculations to help you estimate if a specific warranty is likely to be worth your while or if it will leave you worse off than footing the cost of the repairs by yourself.

Level of Coverage

With so much variation in the coverage level that different types of warranties offer – and manufacturers and car dealers enforcing these limitations very strictly – it’s essential that you think long and hard about what kind of coverage is best for you.

For example, is a bumper-to-bumper warranty worth the money, or is a powertrain warranty more likely to work out better for you from a financial standpoint?

Coverage Period

This is another factor that directly impacts the cost of your extended car warranty, with policies with a longer coverage period being considerably more expensive than those with a shorter period (as there’s a greater chance of making a claim.)

Keep in mind that the coverage period can either be set for a specific number of years or a pre-agreed number of miles driven.

Deductible

If you don’t want to pay anything towards the cost of repairing any damage covered under your warranty, you should look for an extended car warranty with a $0 deductible.

A zero deductible essentially means the manufacturer or the car dealer will cover the entirety of the cost of repairs without any financial contribution from you.
However, keep in mind that the lower the deductible, the more expensive the extended car warranty will be (assuming all other factors stay the same.)

Can My Warranty Be Voided?

Yes, all extended car warranties can be voided by the manufacturer or the car dealership if you don’t follow the agreement’s conditions. The good news is all of these terms are spelled out from the very beginning, so you know exactly what you need to do to ensure your extended car warranty remains valid.

These conditions are mainly related to you maintaining the car and keeping up with regular maintenance. For example, you will need to ensure you change your vehicle’s oil and tires after a certain period of time, carry out relevant checks on specific components to ensure they are in good condition, and only use gasoline types recommended by the manufacturer. This final point is especially crucial for extended car warranties that provide coverage for engine damage and repair works.)

Final Thoughts

For some, getting an extended car warranty is a no-brainer whenever buying a new car, as it provides peace of mind and potentially protects your wallet from a hefty repair bill. For others, it’s not worth the money, and the standard manufacturer’s warranty offers sufficient protection.

Ultimately, it comes down to your own preferences if you choose to buy an extended car warranty. It’s essential to shop around and think carefully about what kind of coverage you’re most likely to benefit from.

When it comes to getting a warranty for a second-hand car, be sure to check that a particular used car is eligible for an extended warranty before purchasing it. Many manufacturers and car dealerships can be quite hesitant to provide coverage for vehicles that aren’t brand new.

Quick Summary

  • An extended car warranty protects you against the cost of certain repairs after the standard manufacturer’s warranty expires.
  • There are many different types of such warranties, including bumper-to-bumper warranties, powertrain warranties, and wear and tear warranties
  • The more coverage a warranty provides, the more expensive it will be.
  • Most extended car warranties purchased are for brand new vehicles, but it’s also possible to get a warranty for a used car, though there are other things to think about, such as the number of miles on the car and the condition of the vehicle.
  • An extended car warranty can provide peace of mind and can be a worthwhile investment if you end up using it.
  • However, many people view it as an unnecessary extra expense.
  • Ultimately, it all comes down to your preferences and whether you think you can benefit from the extra level of protection the warranty offers.

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