Purchasing a car warranty plan may prove to be the best money you spend on a new or certified used car should something catastrophic go wrong. On the other hand, you may end up wishing you had saved the money to use for repairs not covered by the warranty. With a car warranty, you may think you’re covered and not be. By contrast, something could go wrong that you assume is not covered and it is. One thing is for certain: you should understand exactly what the car warranty covers before you purchase it. The price you pay for your automobile might also influence the type of warranty you opt to purchase. High-priced vehicles generally come with expensive repairs. Not having a warranty in that case can set you back quite a bit.
Most new cars come with a complete powertrain warranty. That means if something happens to what is essentially the spine of the car, the manufacturer will fix it. This is a manufacturer’s warranty, which means the dealership stands to gain nothing from it. Both manufacturers and their franchise dealerships sell extended warranties at the time of purchase. Chances are that the dealership has a bigger financial stake in their own warranty than with the manufacturer’s warranty. They will likely push that option hard, but it may not be the best choice. Dealership extended warranties come with time and mileage limits, deductibles, restrictions on where you can take the vehicle for repair and numerous other caveats. Labor may not be included in the warranty coverage. The brake or steering system may be covered, but the components that are most likely to fail are not. While warranties are designed to protect you in case something goes horribly wrong with your car that you in no way caused, they often end up like health insurance providers that drop you when you get seriously ill.
You can choose to buy third party extended warranties from companies like Tesco in the UK and AAA in the States. A Tesco car warranty plan may be a good way to cover your vehicle, but like all warranties, there is fine print. The same is true for a AAA car warranty plan. Extended car warranties override standard warranties, but you are often penalized for purchasing an extended warranty right before your standard warranty expires. Consider the costs, the coverage, and read up on customer complaints before you go with a third party warranty provider.
Car warranties are a gamble. You could buy a warranty for a $12,000 car and never use it. On the other hand, you could not buy a warranty on a car that costs $50,000 and pay dearly for unforeseen repairs. A good rule of thumb is: the more expensive the car, the more expensive the repairs. A pricey vehicle you want to take care of, may require an extended, bumper-to-bumper warranty. For economy vehicles, the price you pay for the extended warranty might be better spent on a down payment for a new vehicle. So opt for the standard warranty, maintain the vehicle and keep your fingers crossed. Vehicles you expect to use for a long time benefit from extended warranty coverage, as you usually come out ahead.
The best car warranty plan for the car you buy is largely a reflection of the value of the car. An inexpensive vehicle may not be worth the price of the extended warranty coverage, while a luxury vehicle almost always is.