New Car Extended Warranty Considerations
How often have you heard someone moan, "The ____ (fill in the blank with any engine component) in my car went out right after the manufacturer warranty expired!"? Yet, if you get the extended warranty offered by the dealer, how do you it's worth the money?
Shop around and save
You wouldn't know the answer to that question unless you took a look at other companies that offer extended warranties on new vehicles. Shopping online for an extended warranty before you purchase the vehicle is a good idea because you can take the information with you to the dealership and compare it with what the dealer offers.
When you're comparing warranties, keep in mind that you're looking for a warranty that covers both mechanical breakdowns AND wear and tear. If the warranty excludes wear and tear, the company can simply state that any repair you attempt to claim was caused by wear and tear, and your claim will be rejected.
Don't buy the least expensive warranty available. Warranty companies come and go, and those with the cheapest price will end up failing and leaving you with no coverage at all. If you have a hard time finding any information about the company, it's probably best not to purchase from it.
What should be covered under an extended warranty?
The real purpose behind an extended warranty is to protect you in case of costly mechanical repairs, so you will want to make sure that any extended warranty package you purchase includes coverage for engine, transmission, fuel and water pump, timing belt, radiator, and drive axle repairs. You might also consider coverage that includes towing services, roadside assistance, rental car reimbursement, and travel disruption expenses. You should also look for a company that pays your repair shop directly, rather than forcing you to pay for the repairs first and then spend months begging the warranty company to reimburse you.
Some other factors to consider include deductibles, whether the warranty will be transferable in the event you sell the car, and whether the warranty company will force you to get repairs done at the dealership, or will allow you to use any ASE certified facility.
Standard exclusions
Don't expect your extended warranty to cover brake rotors or drums, upholstery, shock absorbers, tires, glass, lenses, light bulbs, battery, trim or moldings, bright metal, upholstery, paint, exhaust systems, sealed beams, air bags, or throttle bodies. These items are all standard exclusions on extended warranties.
Do I really need an extended warranty?
If you intend to keep your car "until it falls apart," you should strongly consider getting an extended warranty. But if you're the type of person who likes to get a new car every three or four years, it's probably safe to do without. Most mechanical failures start to happen around the three or four year mark (after the manufacturer's warranty has expired), so if you're pretty sure you'll be looking to trade it in by then, it's your call.
