When it comes to making a decision about an extended warranty, it's important to consider the advantages and disadvantages before committing. Extended warranties, also known as exclusionary guarantees, cover almost all components of a car except for a few exceptions. Customers who purchase an extended warranty usually pay more in premiums than they receive in claims. If you're driving a reliable car and can afford unexpected repairs out of pocket, extending your car's warranty may not be worth it.
However, if your car isn't extremely reliable and you wouldn't necessarily be able to afford major repairs right now, it may be worth considering an extended warranty. Extended warranties can be confusing and difficult to navigate. You may have to contact a third party, wait for a response, and deal with people who speak English as a second language. Additionally, the seller offering the extended warranty usually doesn't know firsthand how the claim process works.
For some, extended warranties add up to a “tax” that adds up to 30% of almost all major purchases. When deciding whether or not an extended car warranty is worthwhile, it's best to ask customers who have purchased them in the past. Comparing the average cost of an extended warranty with the average 5-year repair costs can also help you make an informed decision. Ultimately, extended warranties are an investment in peace of mind that limits financial risk for a specified period of time.
If you're considering purchasing an extended car warranty, make sure to do your research and weigh the pros and cons before making a decision. Consider talking to people who have purchased them in the past, as well as comparing the average cost of an extended warranty with the average 5-year repair costs.