Many extended car warranties are transferable for a small fee, which means you can provide the new owner with comprehensive vehicle protection. Individual buyers may see additional value in your vehicle due to their service contract, resulting in higher interest and a higher overall sales price. When it comes to the long-term cost of your car, extended warranties are usually “a bad deal,” Gillis says. In a Consumer Reports survey, 55% of people who purchased an extended warranty never touched it.
Among those who did use the warranty, most saved less on repairs than they paid for the contract. While all new cars come with manufacturer's warranties, extended warranties are an optional policy that you can choose to purchase once it expires. While car warranties exclude problems related to “consumables” such as tires and batteries, you can make a claim on your breakdown coverage if you have a dead battery or a flat tire that prevents you from driving. Although commonly referred to as extended warranties, the correct term is extended service contracts.
However, even with these averages, it's easier to know if an extended car warranty is worth it. Purchasing an extended car warranty, such as a plan from industry leader CARCHEX, eliminates this source of anxiety and protects against costly repairs. If you're stuck in a position with too few options, you can skip extended coverage or opt for a third-party plan. Regardless of whether you have a new or used car, extended warranties are perfect if you need additional coverage or can't afford the cost of unexpected repairs.
With almost every Extended Auto Warranty plan, you'll get extra benefits on top of the coverage you choose. Manufacturers sometimes have multiple extended warranty plans to choose from, but third-party vendors almost always give you plenty of options. Not only does the value of the extended warranty depend on the provider, but it also depends on the research and due diligence you perform to choose the most reliable and personalized coverage. If you decide to take out a car warranty, you may never have to make a claim.
While there is some overlap between car warranties and breakdown coverage, they aren't exactly the same. After buying a new or used vehicle, you've probably thought about whether you need an extended warranty. An extended car warranty is a type of insurance policy that covers the cost of parts and repairs if you find a mechanical or electrical fault in your vehicle. Regardless of the exact type, extended guarantees are an investment in peace of mind that limits financial risk for a certain period of time.
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