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To Extend or Not to Extend?: Breaking Down the Extended Car Warranty Decision

BY: Adam Karner
A couple looking at paperwork on their couch

Try to imagine yourself cruising down the highway in your vehicle without a care in the world, only to hear a sudden and unexpected noise from under the hood of the car. To your dismay, the vehicle starts to shake and slow rapidly, leading you to pull over as quickly as possible. Any attempt to continue to drive the car leads to the same outcome, so you decide to call a tow truck and get the vehicle taken in for repairs.

Unfortunately, once you receive notice from the mechanic that something major was amiss under the hood and that it requires extensive repairs, you will have no choice but to front the cost of the bill. This can quickly cause a person to need to dive into their emergency savings, leading to financial and emotional distress. The consequences of not having a vehicle protected by a warranty can be severe in the event of mechanical breakdown, but few drivers think about the fact that they may be unprotected.

Even those who have a factory warranty on their vehicle can benefit from adding an extended warranty contract to their car. Offered by third-party providers like Endurance, an extended warranty contract offers financial protection against specific mechanical breakdowns. Learn everything you need to know about this warranty type, including how to evaluate if it’s right for you to protect your vehicle better.

What Is an Extended Car Warranty?

To actually determine whether or not an extended car warranty is right for you, you will first need to fully understand what an extended warranty is. Extended car warranties, as alluded to above, are warranty contracts offered by third-party companies which can be for a new car or used car. These warranty contracts are different than a manufacturer’s original warranty and are intended to offer a driver peace of mind on the road by covering specific mechanical breakdowns.

Extended warranty contracts can vary from high level stated coverage, meaning only a few major specific parts are covered, or it can go all the way to near bumper-to-bumper coverage. The best extended car warranty providers offer optionality in their contracts, such that you can tailor the coverage to your specific needs. It’s important to note that extended car warranties and manufacturer warranties are not the same as car insurance.

Car insurance is legally required on a vehicle in most states around the country, but a warranty contract is not. Car insurance offers financial coverage in the event of a single or multi-car accident, along with damage due to natural disasters and other occurrences, but it will not cover standard mechanical breakdowns. That’s where extended warranty contracts shine. However, not having an extended warranty contract on your vehicle after the manufacturer warranty expires means you will be on the hook for all repair costs related to mechanical breakdowns.

Assessing Vehicle Needs: Age and Usage Considerations

The first step in understanding whether adding an extended warranty contract to your vehicle is the right call or not centers around the needs of your vehicle. For perspective, vehicles fresh off the lot at car dealerships are far less likely to need extensive protection as compared to aged vehicles simply due to how new they are. However, this doesn’t mean that newer vehicles should go without protection.

Consider the age of your vehicle and any potential history of expensive repairs it may have had in the past to guide your decision on how comprehensive of coverage you may need. Additionally, it’s important to take into account how you actually use your vehicle. Those who spend their weekends off-roading in their Jeep may need warranty coverage that’s closer to bumper-to-bumper warranty, whereas someone who only takes their vehicle out on weekends could get by with lighter coverage.

Try not to forget that as a vehicle starts to age, routine maintenance will become more and more important in ensuring its longevity once it is a tried and true used vehicle. This is why finding an extended warranty contract that may offer maintenance benefits, such as an Endurance Advantage contract with up to $3,500 in such benefits, is crucial as well.

The Cost-Benefit Analysis of Extended Warranties

One of the biggest factors that holds drivers back from adding an extended warranty contract onto their vehicle is the associated cost. While it’s true that an extended warranty contract will cost you a monthly or yearly fee, depending upon the provider, how you look at that expense matters.

In truth, you should treat the cost of an extended warranty contract as you would auto insurance. While you hopefully never need to use your coverage, a car warranty covers the unknown in the event of a breakdown. Your warranty payments are essentially a financial safeguard against potential large out-of-pocket costs that may arise from mechanical breakdowns.

With that said, you should still look at what you are paying for your extended warranty contract. After all, if you’re paying a large sum of money but not receiving very much coverage, as some extended car warranty companies structure their contracts, then it may not be worth the cost. However, by finding a balance between thorough coverage and a reasonable price for an extended warranty contract, you can quickly run a cost-benefit analysis to see the upside.

Understanding Coverage Details

The next stage to consider when looking at the different types of coverage you may be thinning about is reading the fine print. All extended warranty coverage plans will come with exclusions, meaning certain breakdowns which aren’t covered. For perspective, high-level coverage may only offer protection for major parts such as the engine or transmission, but not smaller parts such as gaskets and seals.

Once you have determined the needs of your vehicle and run a cost-benefit analysis, you need to read the vehicle service contract or warranty terms you’re being offered. These terms will indicate what is covered by a third-party warranty plan and what is not, which is crucial to understanding what you’re buying.

Consumer Experiences and Market Trends

Once you have determined the type of coverage you might need, such as comprehensive vs. stated warranty plans, you should evaluate the provider offering the contracts. The best way to go about this is to look at reviews from former and current contract holders. Their various experiences can help you to better understand what to expect from the warranty provider you are considering.

Additionally, you can find out valuable information such as the deductible, how the claims process works, whether the customer service is effective or not, and much more. Going further, consumer experiences can also reflect current market trends, meaning you may be able to find cost savings on certain contracts.

Financial Planning: Evaluating Personal Circumstances

Naturally, investing in an extended warranty contract may not be viable for everybody’s budget. With that said, effective financial planning can be beneficial and tip the scales to make it more affordable. Look at the state of your current finances to see off the bat how feasible paying for an extended warranty may be, knowing that you should prepare to set aside a couple hundred dollars per month for the expense.

If this is not in the cards for your budget right now, you should at least take the time to grow your emergency savings in the event that your car does break down. Having this emergency savings in place can mitigate the need for an extended warranty as it won’t require you to dip into your paycheck to cover repair costs. However, for older vehicles that are more prone to breakdowns, an extended warranty is still the most cost-effective option.

The Role of Extended Warranties in Vehicle Longevity

An extended warranty contract is one of the most valuable items you can add to your vehicle. By allowing you to fix repairs promptly and perhaps even cover the cost of maintenance tasks, you will be able to keep your vehicle on the road for longer and in better condition. This will only serve to increase the potential resale value of your vehicle, all while keeping you safe behind the wheel. Depending on the type of warranty contract you’re considering, it may even be transferable in the event you sell the car. This will also bolster your resale value further and is even more reason to consider an extended warranty.

Extended Warranty FAQs

After taking all of the above information into account, you may still have some pertinent questions related to how an extended warranty works, what it covers, or a myriad of other topics. Consider the following frequently asked questions:

1. Is buying an extended warranty on a car worth it?

Whether or not an extended warranty is worth it is entirely a personal decision; however, it can offer much peace of mind on the road for drivers. While there will be a cost associated with having an extended warranty contract, it acts as a financial safeguard against mechanical breakdowns. This can save you thousands of dollars in the future, which is worth it for many drivers.

2. Why do dealerships push extended warranties?

Car dealerships may push an extended warranty on you during the car buying experience, with the primary reason being that there may not be a manufacturer’s warranty on the car. Their decision to do this may be based on the fact that they want to ensure you are protected on the road.

3. Can you cancel an extended car warranty after a vehicle purchase?

For the majority of extended warranty contracts, it is within your right to cancel the contract at any time, though the process may not be simple. To determine whether or not it’s possible to cancel the contract after purchasing your vehicle, read the fine print of the contract to ensure you aren’t locked in.

4. Does an extended warranty ever make sense with a new vehicle?

Contrary to popular belief, an extended warranty contract can still make much sense with a new vehicle. Some new vehicles don’t come with a manufacturer’s warranty whereas others may come with warranty, but it may not be great protection. Adding on an extended warranty contract to fill in the gaps with the manufacturer’s warranty can be an excellent choice to ensure adequate protection.

5. How much does an extended car warranty cost?

The cost for an extended warranty contract will vary from provider to provider and will depend on the type of contract you are considering. In a research survey conducted by MarketWatch, the median extended warranty was around $2,500, which equates to $200 monthly.

6. What does an extended warranty cover?

The extent of coverage offered by an extended warranty contract will depend upon the type of contract you are considering. Powertrain warranty contracts will cover components making up the powertrain, such as the engine or transmission, whereas bumper-to-bumper coverage may include other parts, such as the radiator and more. To see how much is covered by a specific contract, you will need to read the fine print of the contract you’re considering.

Protect Your Vehicle with Endurance Warranty

No driver wants to find themselves on the hook for hundreds or even thousands of dollars in car repairs. Extended warranty providers can connect you with top-notch repair facilities or shops in your area while also covering the financial burden associated with car repair bills.

At Endurance Warranty, we pride ourselves on the customizability of our various auto protection plans. From simple high-level coverage for older vehicles under our Secure Plus plan to near manufacturer-level coverage under our Supreme plan, along with a myriad of plans running the coverage gamut in between, there’s something for everyone.

Every Endurance vehicle service contract comes with 24/7 roadside assistance, rental car coverage, and trip interruption coverage. You also have the opportunity to take advantage of our Elite Benefits package (for a small activation fee). These extra perks include key fob replacement, up to $1,000 in total loss protection, reimbursements for up to four tires per year due to road hazards, and more. By partnering with Endurance, you can rest easy driving on the road, knowing that you’re completely covered in regard to unexpected repairs.

To learn more about our coverage plans and to see how we can help, call our award-winning customer service team at (800) 253-8203 to get a FREE quote. Alternatively, you can shop online to see what your price may look like now.

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