Getting the Best Deal on an Extended Car Warranty

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If you are thinking about buying a new car, part of the negotiations will involve including an extended warranty for the vehicle. Auto dealerships offer a factory extended warranty at the time that you make a new car purchase because they can include the cost of the warranty in your monthly payment. This makes sense for several reasons. Firstly, because you are hoping to keep your new car beyond the three-year factory warranty that comes with the vehicle, and also because an extended warranty allows you to lock in the prices you'll pay for parts and service.
There's a lot to know about extended warranties before you purchase one and it is best to learn as much as you can about them before you head over to the dealership to buy a car. How do you get the best price on an extended car warranty? Let's find out.

Do Your Research

When you have decided on which make and model of vehicle interests you for purchase, it is time to decide whether or not you are going to buy a factory extended warranty from the automaker. Most people don't think about the extended warranty until you are asked about it at the dealership, but it is best to do some research on what the manufacturer offers before you ever step foot in a dealership.

Go to the car company's website and look up the extended warranty plans that are available. You will find several service plans to choose from. Ford Motor Company, for instance, offers four different plans for your new car, SUV or truck. These include Premium Care with over 1,000 components covered, Extra Car that covers 113 components, Base Care with 84 components covered, and Powertrain Care that covers 29 motor components. As you might imagine, Premium Care with its bumper to bumper coverage will cost more than Base Care.
According to the Ford website, Premium Care covers the parts and labor to repair thousands of key components for the engine, transmission, steering, brakes, front suspension, electrical and more-for up to the earlier of eight years or 150,000 miles. All major automakers offer similar extended service plans that come in multiple tiers of coverage. Study the plans that are available to you from the factory. The website will allow you to narrow your coverage to your needs and will tell you what you'll pay for the contract.
Extended warranty plans from automakers are expensive, costing thousands of dollars. That's why most people roll them into their auto financing at the time of vehicle purchase. Adding an extra $30 dollars per month is a lot easier to swallow rather than coming up with thousands of dollars for a service plan before you even drive your new car off the lot.

Negotiating a Better Deal

The good news is that your auto dealership will allow you to negotiate the price of the factory warranty plan. The dealership makes anywhere from $200 to $500 on selling you the plan, and you can do your research, know the costs, and negotiate a better deal at time of purchase:
  1. Call two or three dealerships that sell the make and model of vehicle you want to buy. 
  2. Speak with the finance and insurance managers, explain that you want to buy a new car and need to talk to them about the factory extended warranty on the vehicle. You may find that three different dealerships will give you three different prices on the same coverage. That reveals that you have some wiggle room to negotiate the best deal and you will have a good idea of the going rate for your car's factory service contract. 
  3. After making those calls, you'll know who offers the lowest rate and you may be able to save several hundred dollars.

Know the Costs

When you are in the Finance office, you are generally presented with what your overall monthly payment will be with everything included, and that includes an extended warranty from the automaker. Let the finance manager know that you want to see a breakdown of the cost of the warranty. Ask for an itemized list that includes the costs of everything involved in the vehicle purchase. You want to know the exact cost of the extended warranty so you can decide if you want to purchase it as part of the new vehicle package or wait and buy an extended warranty later.
Can you purchase an extended warranty after you already bought the car? 
Yes, you can purchase an extended warranty from the automaker after you buy the car. When you buy a service contract at the time of the vehicle purchase, the cost of the coverage is included in the vehicle financing. That means you are paying interest on that extended warranty for years over the course of the loan. It also means you will end up paying significantly more for the service contract than if you simply paid for it up front. If you decide to buy the coverage later, you can save up the money to purchase the plan over time.

Factory Warranty or Third-Party?

There are two kinds of extended vehicle warranties that you can purchase: 
  • Manufacturer: Those from the manufacturer and those available through a third-party company. While most car dealers offer both kinds of coverage, factory warranties have more to offer. That's because with a factory extended warranty you get factory-trained technicians to repair your car, who use manufacturer-authorized parts. You don't have to wait for repairs with a factory warranty and you don't have to file claims or pay money up front before a repair can get underway. Your local dealership handles the entire procedure. Plus, factory warranties generally allow you to transfer the warranty to a new owner when you sell the car.
  • Third-Party: With third-party warranties you may save a bit of money up front when you buy the extended warranty, but to use it you'll have to file a claim, wait for the company to pay on it, and you may have to pay for the repairs yourself up front while you are waiting to get paid from the third-party company.
Final Thoughts
By looking on the automaker's official website, you can find which extended warranty plan is right for you. The highest level of coverage provides you with comprehensive coverage of such important components as advanced safety, driver assist and infotainment systems that can be very expensive to repair out of pocket.
It is important when shopping for an extended warranty plan that you know the deductible range of the plan. Many have the deductible set at $250 and the more expensive plans offer the lowest deductible rates. It all comes down to how much you find acceptable to pay out of pocket up front when you use the plan. Make sure you know exactly what your plan includes and what it excludes. Know what is covered under your plan so you aren't surprised later when you need coverage only to find that something important is not covered. By heeding the advice in this article, you'll be able to purchase the most important attribute of an extended auto warranty... peace of mind.
Let Lithia Help
With over 75 years of experience in offering personal transportation solutions to our clients, we can get you into the extended warranty plan that is right for you. Whether you are purchasing a new or used car, we'll find a plan that fits your needs at a price you can afford.