When it comes to buying a car, many people consider purchasing an extended warranty. But is it really worth it? Before making a decision, it's important to understand what an extended car warranty covers and how it works. An extended car warranty is a service contract that covers repairs and components that break down as a result of normal use. It doesn't cover regular maintenance or wear and tear damage.
If you don't take your car for regular maintenance, you could void the extended warranty. The business model of buying extended warranties is not a low-margin model. There is enough money for everyone involved. In fact, extended warranties offer much more profit in almost 90% of cases than those obtained with the item actually sold.
If your vehicle is still covered by the factory warranty and you intend to stick to the regularly scheduled maintenance plan, you can probably wait for the warranty to be extended. Owners who do their own maintenance or modify their vehicles are probably not ideal candidates either. However, an extended warranty might make sense if your vehicle manufacturer's warranty coverage has just expired or if you've recently purchased a used car in good condition. From having to contact a third party, to waiting to dealing with people who speak English as a second language, some extended safeguards seem designed to confuse, redirect and thwart the initial efforts of those trying to file a claim.
For some, extended guarantees add up to a “tax” that adds up to 30% to almost all major purchases. If you start to consider the odds, you'll find that buying extended warranties just doesn't add up. If you can actually go shopping in your local area, repairing the lawn mower or refrigerator may cost less than the price of the extended warranty. The last reason you don't need an extended warranty relates to the payment method you used for the purchase.
Most extended warranty plans are quite affordable and provide peace of mind to those who worry about unexpected repair costs. Extended warranties are typically chosen by buyers who intend to maintain ownership of their vehicle beyond the initial warranty. Like customers who purchase an extended warranty, insurance customers also pay more in insurance premiums, on average, than they receive in claims. All of this should give you a very clear idea that an extended warranty is NOT the best thing for the end user.
The warranty extension begins at the end of a specific waiting period, which most vendors require you to continue after purchasing your contract. When it comes to an item, such as a power tool, extending the warranty you purchase can cause problems when sending the tool (or forcing you to go) to an impractical repair shop that is not practical and that offers the lowest price for most of the work.
