Should You Buy Extended Warranty?

You've decided: you're buying THAT car. You get into the finance office and the pretty Finance Manager offers you the platinum package warranty - you:

 

A) Decline and not think about it again 

B) Say you'll think about it and decline 

C) Buy 

D) Take whatever she's offering because she's pretty.

 

At this point you're not sure right?

 

Extended warranty is an insurance policy on your vehicle, to safeguard you from unforeseen repairs.True warranties, are included in the price of the vehicle; extended automotive warranties are really service contracts, since they cost extra and are sold separately. They are normally purchased "point of sale" but can be added on after the car has already hit the pavement. With the ever-increasing cost of repairs and if you like to be in control of your budget, extended warranty is for you. Has anyone ever given you tips on how and what kind of warranty to purchase?

 

Well here are some tips:

 

Reliability of the car your purchasing - Skim reviews ie. those extended test drive reviews, stop at a few on-line forums and see what people are complaining about. Also, if you have heard horror stories about your car, protect yourself - buy the warranty.

 

How long are you keeping your car for? - If you don't plan on keeping your car more then the 3 years, 60,000 km mark or when your warranty comes up, the answer should be: don't buy. Buying used? Though the dealer will have definitely inspected the vehicle before delivery it is always a good idea. Buying a 1 model year old vehicle - though the vehicle may still have plenty of factory warranty left, you should consider again how long you plan to keep it - will it be a family heirloom passed from generation to generation? might be a good idea.

Is your car a hybrid? I don't want to know how much it costs to repair a hybrid engine but I'm sure it's more than a gasoline engine, so if you plan to keep this car - buy the warranty.

Is the warranty transferable? Most warranties are transferable to a new owner not to mention it is a nice selling point. 

Is there a deductible? How much and on every repair?

Where can you use the warranty? Is there a list of dealers or shops? Are they close? Does it have Canada and US coverage?

Who backs the warranty you are buying? The underwriter is important and knowing that the warranty is fully backed should the company go belly up is good to know also.

What is covered? What's more important is what's NOT covered and how much do they cost.

Do you have to pay for repairs up front? Some warranties require you to pay upfront and send in the receipts to get reimbursed. It is much easier if you don't need to do this.

So, back to the multiple choice question - If you decline, I hope you are prepared for any and all repairs. If you chose the warranty, good - long live your vehicle - but one last suggestion: Ask for a discount on the warranty!

Sources: Edmunds, Financial Highway.