If you've bought a vehicle, you've probably been approached about purchasing an extended warranty for your new set of wheels.
But do you know when to take the warranty, and when to say, "No thanks"?
Bob Nicks, indirect senior lending consultant at Dupaco, offers this rule of thumb: Buy an extended warranty whenever you're purchasing a used vehicle or a new vehicle that you plan on owning beyond its factory warranty. Here's why:
"Typically, at the end of three years or 36,000 miles, you have no factory warranty anymore," he said. "But it's when you get to the 50,000 to 60,000 mileage range when things start to break down and you really want that warranty."
If you'll need an extended warranty with your next vehicle, Nicks recommends purchasing it when you buy your car to get the best deal. Don't be afraid to shop around. Like dealerships, financial institutions also sell extended warranties.
To find a warranty that works for you, read the fine print:
- Get a copy of the warranties you're considering, and compare them.
- Watch for red flags in the verbiage. Stay away from contracts that say repair "parts may be used or recycled," or warranties that "will not cover wear and tear." "As the vehicle gets older, naturally things are going to break down, and that's why you're buying the warranty," Nicks said.
- Find out whether the warranty begins when the factory warranty expires, or if it starts at mile 1. It makes a big difference.
- Find out what the deductibles are and whether the warranty is "bumper to bumper," which cover a wider range of parts. Ask whether it covers diagnostics, electronics, radios, car batteries and windshield repair. "Some do and some don't. That's why you really want to compare them to see what suits your needs," Nicks said.
- Ask whether the warranty includes roadside assistance, if that's important to you.
- Avoid warranties that require more maintenance than what the manufacturer suggests.
- Find out how claims are handled, and be leery of warranties that restrict the number of claims you can turn in. Do you have to pay for repairs upfront, or will the repair facility turn in the claim for you? Will you receive rental reimbursement? Can you choose the repair facility if you're out of town when your car breaks down? "When you have a problem, you don't need any more hassles," Nicks said. "You just want your car back so you can get back on the road."
By Emily Kittle