While these plans can save you money in the long run, they can be expensive. It is very important that you fully understand the plan and what is covered, and just as important, what is not covered.
Questions to Ask before you Buy an Extended Warranty
Factory warranties from automakers are better than ever these days. But what happens when your factory warranty has run its course and is about to expire? You may have heard of extended auto warranties that offer protection from costly breakdowns, but do you really need one? Let's find out and offer some questions you should ask before buying an extended warranty. There are two kinds of extended auto warranty plans; the kind you can purchase from the car dealership when you buy your car, and aftermarket plans offered by outside companies that you can obtain online.Â
Questions to Ask before you Buy an Extended Warranty
When asking yourself if you really need an extended warranty, the first question to ask yourself is, how do I use my car? Is your vehicle your lifeline to get to work, to the store and to your kid's soccer practice? What would happen if your car had a major breakdown? Could you afford the repair bills? If something major were to go wrong with your car, could you shell out a thousand dollars or more to fix it? How many miles do you drive in a month?Â
If your car sees heavy use in commuting or for travel, it could be more prone to have mechanical problems. The same is true if you live in an area that has harsh winters. The more extreme the conditions, the more likely you could have mechanical issues. So, look at how you use your car week after week in order to decide if you even need an extended warranty.
It definitely pays to shop around to find the right extended car warranty company for your needs. Search the Internet for the top rated auto warranty companies. Check their reputations with the Better Business Bureau. You want to work with a company that has been in business for a long time and has a list of positive feedback from customers. How a company handles customers' claims is a strong indication of how you can expect to be treated if you need to use your warranty. A company's reputation should proceed them.
Keep in mind that there are government regulations in place that protects consumers from auto warranty scams, but a little due diligence when choosing the warranty company can go a long way.
Another big question is to ask yourself how long you plan on keeping your car. If you are thinking about trading in your car in two or three years, you may not need an extended warranty. According to Consumer Reports, 55 percent of people who own an extended warranty plan never use it. Also, what happens when you sell the vehicle? Many extended warranty plans are transferable to the new owner and that can actually be a positive feature when selling the car, adding to its value.
Generally speaking, the more you pay for an extended warranty plan, the less the deductible amount is likely to be. You can save money up front by choosing a high deductible amount, but it might cost you more in the long run if you actually use the plan. Make sure you understand your plan's deductible details and find out how the deductible is applied.
You should also find out what happens should you decide to conduct repairs yourself or if there are preventative maintenance requirements. What is required in order to keep your warranty valid? Some contracts require you to carry out ongoing scheduled maintenance. Can you change your oil yourself or does this void your warranty? Does simple maintenance have to be performed by an authorized shop?
Really look at the coverage that is being offered. It makes a big difference. Get all the details about what is and is not covered under your warranty plan. There are a lot of different options out there and you want a plan that is right for you. Extended warranty plans generally cover your vehicle anywhere from two to seven years. As mentioned above, having a seven-year plan may be a waste if you plan on selling the car in two years. Look at several plans from several different companies to get a better idea of what they are actually providing you.
Besides knowing the terms of the contract including its duration as far as time and mileage, be aware that some policies have coverage limits based on the vehicle's depreciation. Such policies pay less for repairs as your car gets older and logs more miles. Some policies also limit how many days they will provide coverage for rental car fees and towing charges. Read the fine print.
This might seem like a no-brainer, but make sure that the contract offers details on how the payment for auto repairs are to be handled. Will you be expected to pay the repair shop yourself and then get reimbursed by the warranty company? If so, how long will you be waiting for your money? The best plans pay the auto service center or repair shop directly and lets you keep your money in the bank.
How do you get out of the deal? What if you are unhappy with your extended warranty for any reason? How do you get out of the plan?Â
Make sure you read the entire contract to find out how to cancel or transfer the policy if you sell the car. Some warranty plans are non-transferable. Others allow you to transfer your plan for a small fee.
Make sure you read the entire contract to find out how to cancel or transfer the policy if you sell the car. Some warranty plans are non-transferable. Others allow you to transfer your plan for a small fee.
It's very important to know how the warranty company processes claims. This can make a huge difference if you are waiting to get the company's authorization before you can get your car towed or repaired. Being stranded by the side of the road is an awful feeling, especially if you can't get a representative on the phone from your warranty company. Find out if the company can be contacted outside of business hours. An extended warranty plan should be all about convenience… your convenience. Be sure to read reviews online to see how the company comes to the aid of its customers.>
When looking around for an extended auto warranty, be sure to notice what extra services and benefits are provided. These can be very important. Let's say your car's transmission needs to be replaced and your car will be in the shop for a week. Does your warranty plan include a free rental car for you to use until you get your car back?Â
Some plans offer 24-hour roadside assistance as part of the plan. If you have a breakdown, your warranty company will send assistance. How an extended warranty company responds to your needs tells you everything you need to know about whether or not its services make sense for you and provide you with a sense of security, mile after mile. Because what you are really buying with an extended auto warranty… is peace of mind.
Some plans offer 24-hour roadside assistance as part of the plan. If you have a breakdown, your warranty company will send assistance. How an extended warranty company responds to your needs tells you everything you need to know about whether or not its services make sense for you and provide you with a sense of security, mile after mile. Because what you are really buying with an extended auto warranty… is peace of mind.
Additional Questions
Need extra protection?
If your auto factory warranty is about to expire, you may be thinking about getting an extended warranty. We all fear what would happen if our car's motor or transmission were to go south, leaving us with major repair bills. Is an extended warranty or "service contract" right for you? Such a vehicle service contract can cover your repair costs for mechanical breakdowns. Let's find out with these six questions to ask before you get an extended car warranty.
Do you Need an Extended Warranty?
Do you have four or five thousand dollars socked away for a rainy day should your car break down? If so, an extended warranty plan may not be a big priority for you. Likewise, if you seldom use your car, you're at less risk of having a breakdown that someone who uses their vehicle heavily every day. If, on the other hand, the idea of sudden major mechanical failures causes your stomach to knot up, you may prefer the peace of mind found in having an extended auto warranty.
What is Covered?
When shopping for an extended auto warranty, be sure to read the entire coverage contract so you understand what exactly is covered by the extended warranty as well as what is not covered. Compare the specific details of the plans you are considering so you can find the one that best suits your needs. These plans generally cover your vehicle from two to seven years, depending on the contract. How long are you intending to keep your car? Take that into consideration for the length of coverage.
Is the Plan Transferable?
Some extended warranty plans are transferable to a new owner, while others are not. Transferable warranties can be a good thing because they increase the value of your used car when you sell it. There is usually a small fee to transfer the warranty that will cost you around fifty dollars. It's worth asking your provider about.
Is the Warranty Company Reputable?
A number of auto warranty businesses have turned out to be scams, taking your money and giving nothing in return when you need them. To avoid being taken, consult the Better Business Bureau to find providers that have been in business for a long time and who have an excellent rating with customers.
Are there Other Benefits?
Read all the fine print thoroughly when you choose an extended auto warranty. You may be pleased to find a number of perks you didn't expect. These can include a free rental car while your car is being repaired, and trip interruption reimbursement. Some include 24-hour roadside assistance that comes in mighty handy when you and your vehicle are stranded.
Who Services the Contract?
One last thing to consider is, "Who services the contract?" Many auto dealerships offer extended warranties from third-party companies. Keep in mind that it is best to have a service contract that is backed by a major automaker, rather than a private company. For one thing, you have the peace of mind that the warranty is backed by the vehicle manufacturer, and you can get your car serviced and maintained at any dealership of that brand in the country. A third-party contract might only be good at the dealership that sold it to you.
Let Lithia Help!
We have been helping people with all their personal transportation needs for over 75 years and have over 260 auto dealerships from coast-to-coast. If your vehicle's warranty is close to expiring, give your local Lithia dealer a call. If an extended auto warranty is in your future, we can get you into a plan that's right for your needs.
