When you're in the process of buying a car, purchasing an extended warranty may seem like a good idea. You're making a huge financial commitment and you want the peace of mind that comes with knowing that your investment is protected for as long as possible. However, the truth is that this particular "peace of mind" might be too expensive, so you need to consider a few things in order to determine if an extended warranty is worth the price.
Do You Really Need the Coverage?
When considering whether or not an extended warranty is worth it, it all comes down to this: does spending money on the extra protection actually save you money in the end? The answer is: probably not. For example, in a survey conducted by Consumer Reports, most car buyers who opted for extended warranties reported losing money in the final analysis. Even if some necessary repairs were paid for by their plans, the costs of these repairs didn't add up to the price they paid for coverage.
Keep in mind that not all warranties are created equally. Some plans only cover certain parts of the vehicle and even "bumper-to-bumper" coverage probably isn’t going to include every type of repair. Understanding what these used car warranties cover can go a long way to determine if they’re worth the cost for you.
If You Decide an Extended Warranty Makes Sense
It may be the case that the benefit of extra coverage is worth every penny to you, or you have an older used vehicle that makes you feel uneasy. Even if you never need it, at least it's there, right? Make sure you consider a few things first before purchasing an extended warranty on your car:
- Don't assume that you need to purchase the extended warranty at the dealership. You may actually find a better deal elsewhere. While some buyers like the convenience of rolling the price of the warranty into the total amount financed, doing this means that you’re going to end up paying interest on the warranty as well as the auto loan.
- Know that you can bargain for a better price. Just like the vehicle you're buying, the asking price doesn't necessarily have to be the final cost of the product. You never know if a better deal is possible unless you ask, and the worst that you can ever be told is "no."
- If you go in, go all the way. Bumper-to-bumper coverage is usually only a little more expensive than partial coverage, so if you're going to pay for an extended warranty, you should probably consider full protection. If you have trouble saving and have bad credit, then an extended warranty with your bad credit car loan is probably a very good idea.
- Read the fine print. Before you sign anything, make sure you understand the warranty contract fully. You should be aware of exactly what's covered, what isn't, any deductibles, and if there are any restrictions concerning which repair shops you can use.
The Bottom Line
Are extended warranties worth it? It depends on the vehicle, how much peace of mind you need, and if you can afford it. Generally, you don’t need an extended warranty, but it is an option for you to consider. If an extended warranty is on the back burner of your list of things you need, and you simply need help getting financing, let Auto Credit Express help. We work with a nationwide network of dealerships that have the lending resources available to help people in different credit situations. Get started today for free by filling out our online car loan request form.