Like a house, once you buy a car, you’re responsible for keeping it maintained and for managing any repairs it needs. New vehicles usually come with a manufacturer’s warranty that covers defects within the first three to five years. However, new car warranties also specify the coverage expires once you’ve driven a certain number of miles. If you don’t know if you can trust the odometer readings, check out the vehicle history. This will help you find out the exact number of miles traveled.
Warranties typically assume you’ll drive 12,000 miles in a year. But it’s not unusual for some drivers to log more miles than that, especially if they commute to work. If you buy a used car, you will likely not get a manufacturer’s warranty at all. For peace of mind, you can consider purchasing an extended warranty.
These types of warranties serve as a repair contract, reducing some of the risks associated with vehicle ownership. They can help cover the costs of repairs you’d normally have to pay for out of pocket. But before you buy extended coverage for your car, you’ll want to weigh the plan’s cost and benefits. Here are four of the most important things to consider when shopping for a vehicle warranty.
1. Provider Reputation
You can purchase a reputable extended vehicle warranty from a car dealership or directly from a third-party provider. When considering whom to purchase a warranty from, take your time to research the provider’s reputation. This includes things like online reviews, Better Business Bureau ratings, and recommendations from people you know and trust.
Average online reviews and star ratings of four or higher are generally acceptable as a base threshold. BBB ratings of B+ or higher are also considered to be good by most consumers.
You’ll also want to look at the number of complaints, why they were filed, and how the company responded. Also, filter through reviews to see if there’s more negative than positive sentiment. Determine whether there are common issues or sources of customer frustration and disappointment.
Another important factor to research is the warranty provider’s financial standing. Check whether the provider maintains a reserve account for claims. The best extended auto warranties will be backed by a financially sound administrator or company.
Pay attention to reviews and feedback about whether customers’ claims were paid within a reasonable amount of time. Some warranty plans pay dealerships or repair shops directly, while others reimburse you after repairs are completed.
2. Plan Coverage
The goal of purchasing an extended warranty is to help you pay for major repairs on your vehicle. But you won’t realize that goal if you select a plan that doesn’t cover what you need.
While you can’t expect a vehicle warranty to cover normal wear and tear, it should at least cover mechanical breakdowns. In the world of auto warranties, you’ll also find plans with bumper-to-bumper coverage and reimbursement for items like tire replacements.
Read through the contracts to understand what type of repairs are included and what plans exclude. You don’t want to have to repair your steering system and find out the warranty doesn’t cover the parts. Some plans have wear-and-tear clauses that exclude repairs on parts that tend to break down with use. Car owners might find it doesn’t make sense to invest in warranties that don’t cover wear-and-tear items.
Owners who drive a lot or purchase high-mileage vehicles may want to select plans with additional coverage. Most providers offer different plans and coverage based on a tier system. Consider your car manufacturer’s and model’s track record, the current vehicle condition, and your driving habits and preferences.
Some plans, for example, provide you with added collision and vehicle loss protection. Others include reimbursement for towing, car rental, and lodging expenses. Some drivers find these types of coverage unnecessary because their auto insurance provides them.
Extended auto warranties may give you the choice of choosing plans with or without deductibles. A deductible is what you’ll pay the dealership or service shop at the time of repair. Plans with higher deductibles tend to cost less per month than those with lower or zero deductibles. In addition, plans with zero deductibles may come with an initial surcharge.
With deductibles, you’ll want to think about what you can afford to pay out of pocket for repairs. If you keep less cash on hand, plans with lower deductibles will be a better fit. But if you have enough discretionary income to keep some emergency savings, higher-deductible plans can be more cost-effective.
When examining the contracts of different extended warranties, pay attention to how the company charges the deductible. Some providers will assess the deductible for each repair item versus repair visit. If the repair shop finds you need a new transmission and battery, you’ll either pay your deductible once or twice. Extended warranties that charge per item will require you to pay it twice for each repair. With plans that assess per visit, you’ll only pay once.
4. Choice of Repair Locations
Before you commit to an extended vehicle warranty, find out whether you’ll be limited to specific repair locations. A few warranty contracts might stipulate you take your car to a certain dealership or dealership network. Although this may seem harmless, what happens if that location changes ownership or is no longer there?
There’s also the possibility that your car will break down while you’re on a cross-country trip. If you work in a different city where the specified service provider doesn’t exist, a location restriction can be inconvenient. You’ll pay more in towing expenses to get your car back home than to a nearby repair shop.
Instead, look for extended warranties that let you get your car repaired at any certified location. Repair shops that carry the Automotive Service Excellence or ASE certification can give you more choice and flexibility.
If the plan you want does have restrictions, weigh the chances you’ll break down outside of the service area. Warranty plans that stipulate repairs be made at shops that are part of a national chain can provide helpful flexibility.
Because of robocalls involving auto warranty scams, you may be hesitant to purchase an extended repair contract for your vehicle. If you’d rather not shell out thousands of dollars for an unexpected repair, though, extended warranties can be beneficial. They can protect you against financial loss after your new car warranty expires or when you buy a used vehicle. Evaluating the warranty’s provider, coverage, deductible, and repair terms will lead you to the best choice.