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. When you buy a used car, you may be offered an extended warranty, but you may not be sure what it is or if you need it.
Extended warranties are great for people who want to be prepared for possible repairs that may be required once the factory warranty expires. Attrition has to be on my list of the top three excuses sellers give me when they try to sell me an extended warranty. And they will purposely sell you an extended warranty that ends before then, which means that the odds that you will actually be able to use the warranty are quite low. Unlike regular warranties, extended warranties are sold separately, meaning you have to pay more for them.
If you're buying a used car or if the manufacturer's warranty has expired, it's worth considering an extended car warranty. If you want to buy an extended warranty, be sure to buy one from a company with a long history, for example, through a car manufacturer, and understand the fine print. For example, if a part of your car that is not covered by the warranty fails and damages a part that is covered, all warranties will not be paid. More comprehensive car warranties will cover more faults, such as some wear coverages, but will be more expensive.
Extended car warranties are optional, but can be useful if you find a breakdown on your car that needs costly repairs, as they can cover part or all of the cost. And if most customers had to use their extended warranty, companies would lose a lot of money. At the end of the day, it's not worth adding an extended warranty to your car (especially if you owe money for it). 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.
Most third-party warranties have deductibles, but extended factory warranties usually don't have a deductible for repairs. Understanding warranties can be confusing, so it's important that you understand what you would pay to decide if an extended warranty is worth it. When deciding whether or not an extended car warranty is worth it, you will need to look carefully at the terms of each policy. Some manufacturers offer 0.0% APR financing for warranties, even when the vehicle is purchased at a higher rate.
However, many extended mobile phone warranties only cover defective parts and do not help in case of loss, theft or damage to the phone.