Nearly all new cars come with a warranty of at least three years and 36,000 miles. For many brands, the warranty is even longer. Buyers should read all of the warranties to know what they cover, for how long, who will respect the warranty, and what is required for it to remain valid. You want one that comes as close as possible to the terms of the original warranty, offered preferably by the car manufacturer and not by a third party, a true extended warranty.
If you keep or lease your car for less than the duration of the factory coverage, you don't repeat or need an extended warranty. Over the years, I've spoken to hundreds of car buyers and have found that the decision to purchase an extended warranty is a very personal and quite emotional one. However, regardless of the technical term, third-party warranties may offer you coverage that is similar, if not better, than that of a dealer or car manufacturer, and you can purchase that coverage at any time. Finding the extended car warranty that best fits your needs can be difficult due to the large selection of third-party suppliers, who probably won't fit your requirements from a quality assurance provider.
If you're starting the process of buying a new car, van, or SUV, the first thing you'll probably hear about the warranty extension is when you sign documents at the dealer's finance office. The warranties do not cover oil changes, brakes, tires, or other “wear items”, that is, objects that are subject to wear and tear. The older a car becomes, the more expensive it will be to purchase extended warranty coverage, since an older vehicle is supposed to be more likely to require repair services. This is because, as CR says, extended warranties can have a lot of drawbacks, since they rely on the small print of the contract to deny coverage for almost any reason.
On the other hand, if you plan to maintain your vehicle beyond the original factory warranty period or, as some like to say, “until the wheels fall off”, then having an extended warranty makes a lot of sense. Warranties are included in the purchase price at the time of sale; any additional coverage that is purchased to cover a period of time after the expiration of the initial warranty is called a service contract. When deciding whether or not to buy an extended car warranty or service contract, it all comes down to the likelihood of your car breaking down and how much it would cost you if you did. And then there are the confusing calculations needed to determine if an extended warranty will actually save you money.
