While some people see extended warranties as peace of mind, others are less sure about their value. A study by Consumer Reports found that more than half of people who bought extended warranties for their cars never used them.
The study also found the cost of repairs was usually less than the cost of the warranty. So it would have cost owners less to pay for the repairs out of pocket.
If you’re the kind of person who sells your cars frequently, as in every three years or so, an extended warranty probably isn’t your best investment, since it doesn’t kick in until after the original warranty has expired—which is typically three or four years.
If you tend to hang on to your car for many years, however, some experts see the value in investing in an extended warranty. According to Consumer Reports, cars become less reliable over time, so you may feel better knowing that repair costs are covered.
However, it’s important you make sure you’ll truly be getting value from the warranty if repairs are needed. Read the small print and make sure you know what is covered and where you can take your car for authorized service, since these warranties typically come with restrictions that can void them if not followed properly.
The warranty advantage
Some car owners wouldn’t dream of being without an extended warranty. If you find it difficult to put money aside for repairs and would be hard-pressed to cover repair costs if they arise, it could be a good fit.
According to AAA, it may be easier to re-sell a car that comes with an extended warranty, as the new owner will feel more protected in case any unseen mechanical issues crop up.
Don’t buy a warranty just because you feel pressured into it. You can always take time to review the terms of an extended warranty and buy it after you’ve purchased the car. Just like the car the warranty is for, the price of the warranty is also negotiable; Consumer Reports found that buyers who haggle save an average of $325 off the original price.
If you decide to buy a warranty, be wary of third-party companies. Third-party warranty scams have become increasingly prevalent, prompting the Federal Trade Commission to issue alerts on its website. The FTC tells consumers to research third-party companies thoroughly before purchasing an extended warranty from one. An online search and a quick visit to the Better Business Bureau website should be able to tell you what you need to know.
Find out more about important resources for car owners, from how to buy the right car to keeping it in tip-top shape to avoiding accidents. It's also crucial for new car owners to have the right insurance coverage for protection against the unexpected. Learn more about Nationwide car insurance today and see whether you qualify for a discount on our already affordable auto coverage.