If you’re buying a new car, it’s inevitable the dealership will offer you an extended warranty. The idea is that after the original warranty on your car has expired, you’ll continue enjoying the same coverage. Sentiments on whether or not extended warranties are needed vary greatly. Some buyers feel it’s too risky not to get a warranty, while others don’t give it a second thought.
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.
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.
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