Should I ever make extended warranties at the dealer?

Extended warranties can reduce financial stress, especially for those who own models from unreliable brands. They are available through dealers, car clubs, and insurance companies (sometimes called mechanical breakdown insurance). Plans may vary in terms of time, what they cover, and price. Not all dealers accept third party warranties.

If you have an OEM warranty, such as Toyota Care, any Toyota dealer must accept it. But third party companies are where gray areas can exist. We recommend that you call your local service center to see if they accept your warranty. Just before you're ready to sign on the dotted line and buy a car, dealers will often offer you an extended warranty.

Some dealers also refer to these warranties as vehicle protection plans. Today there are far fewer car thefts in the United States than there were 30 years ago. In 1991, more than 1.7 million cars were reported stolen. Today, only about 775,000 car thefts occur each year.

Over the years, I've talked to hundreds of car buyers and found that the decision to buy an extended warranty is very personal and quite emotional. If you keep or lease your car for less than the duration of factory coverage, don't repeat, you don't need an extended warranty. An extended warranty, also known as a vehicle service contract, is a contract between you and a supplier designed to protect your car from costly repairs. You will also have some maintenance and repair work done on your car at no cost when you have an extended warranty.

But like the financing they offer, dealers tend to increase the cost of extended warranties to make a profit. If you plan to keep your car until the wheels fall off, you may want to consider purchasing an extended warranty to cover repairs in the car's fifth and sixth year or more. Some dealer representatives may claim that you can only get a certain interest rate or financial approval if you purchase the extended warranty at that time. Most third-party warranties have deductibles, but extended factory warranties usually don't have a deductible for repairs.

You don't always have to purchase an extended vehicle warranty from your dealer when you purchase the vehicle. Extended warranties are great for people who want to be prepared for possible repairs that may be required once the factory warranty expires. Some manufacturers offer 0.0% APR financing for warranties, even when the vehicle is purchased at a higher rate. An extended car warranty is a way to ensure that your car's standard warranty is extended so that you are covered as a driver.

One of the best ways to ensure that an extended warranty pays off is to get a quote directly from a warranty provider. Next, we'll look at the different types of extended car warranties, the factors that affect cost, and ultimately whether extended protection is right for you. Buying an extended warranty is a gamble: investing in an extended warranty gives you peace of mind and provides coverage in the event of a mechanical breakdown, but you may not need it.

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