EXTENDED WARRANTY PROGRAMS-ARE THEY RIGHT FOR ME?
Here is one the things that most people question when buying a new or preowned car. Should I get an extended warranty? The answer in most cases is yes. The cost of repairing vehicles has soared dramatically over recent years, as well as the sophistication of these newer vehicles. This can lead to some really hefty bills in your service department, or your local repair shop. The problem lies in the diagnosis process due to the complexity of components, and the car can spend many hours in the shop before the problem can be isolated resulting in higher labor bills. The parts cost has risen astronomically, and nothing is cheap on these cars anymore. I suggest protecting yourself for at least the term of the loan at a minimum. This will keep you from worrying about any unexpected expensive repairs, and you only need to be concerned with making payments on your car or truck. If the car is under warranty, and you do not plan on keeping the car for a long time, then there is no need for an extended warranty. Only you know what your normal trade/replacement cycle is so adjust your thinking accordingly. I am a big believer in extended warranties, because of the cost benefit analysis. The potential for financial ruin is far too great to ignore in this case, so it is wise to look closely at these programs.
Some of these warranties are expensive and for good reason, because they are worth it. The cost of one transmission failure will put most people in a very bad position financially. A complete engine failure and replacement can be well over $20,000-$30,000 on some highline cars. Ouch!!! Most repairs will not be of this magnitude, but repair bills can add up quickly with a troublesome car and leave you strapped. You can avoid this by choosing a good plan that is affordable, and gives you the coverage that you need under your circumstances. There are usually different plans to choose from depending on the level of coverage desired. They are usually broken down in to plans such as powertrain(engine, transmission, driveline only), powertrain plus(powertrain plus additional items), Complete, Gold, Platinum plans, or some variation of the most comprehensive plans available. Every warranty company has their own variations of plans available, so be sure to understand what is covered under the plan, and more importantly what is not covered. Most of the plans will have deductible choices also, so you can save a little bit by choosing a higher deductible for the same coverage.
I have compiled a small list of independent warranty companies for your convenience. These companies have the highest ratings from the Better Business Bureau, so I encourage you to get a free quote from any one of them, if not all. Do this before you sit with the finance manager if you are purchasing a new or preowned vehicle. The finance manager at a dealership or an independent car lot will be offering you some type of extended warranty program(yes, they make money on these also). This is an almost certainty so you need to be prepared before you sit down. You can definitely purchase a warranty with the dealer, but it will certainly cost you more. These warranties just like everything else are negotiable from the dealer. Depending on the dealer/finance manager there can be as much as a 100% markup in these warranties, and even much more in some cases. They can charge anything they want if you are willing to pay for it and the bank will allow it.
Please be sure to read the contract in detail on any of these warranties, so that you know exactly what you are spending your money on and what you are getting. Just because the plan is called “Complete” does not mean it covers everything. There are always exclusions and stipulations. Read carefully!!
The following warranty companies are ranked at A or higher according to the Better Business Bureau.
1. Carchex
2. Endurance
3. Warranty Direct