The Truth About Extended Car Warranties
Many people consider buying a new car as an exciting endeavor. One aspect they often encounter is whether they should purchase an extended car warranty. Extended car warranty facts can be confusing, and buyers might wonder if these warranties are worth their cost. This blog delves into the truth about extended car warranties, providing essential insights and statistics to guide your decision.
What Is an Extended Car Warranty?
An extended car warranty, also known as a vehicle service contract, is an optional protection plan you can purchase. This warranty covers repairs and replacements beyond the manufacturer’s original warranty. These warranties may cover major components like the engine and transmission, but they often differ in coverage details, limitations, and costs.
Extended Car Warranty Facts
Understanding the facts about extended car warranties can help car owners determine if these plans are right for them. Here are some critical points to consider:
- Average Cost: According to Endurance Warranty Services, the average cost of an extended car warranty ranges from $350 to $700 per year.
- Coverage Varies: Extended warranties can cover different aspects of your vehicle. Basic plans often cover the powertrain, while comprehensive plans may include electronics, air conditioning, and more.
- Peace of Mind: Extended warranties provide peace of mind by covering unexpected repairs after the manufacturer’s warranty expires. This can be especially useful for older cars or those with higher mileage.
- Repair Costs: According to Consumer Reports, the median cost of an auto repair in the U.S. is around $375. Extended warranties can offset these costs.
- Exclusions: Not all repairs are covered. Extended warranties often exclude routine maintenance and wear-and-tear items like brakes and tires.
Statistics on Extended Car Warranties
To make an informed decision, it’s crucial to look at the numbers. Here are some relevant statistics concerning extended car warranties:
| Statistic | Source |
|---|---|
| 69% of people who’ve bought an extended warranty say they’ve used it. | Consumer Reports |
| 25% of warranty buyers regret their purchase. | Consumer Affairs |
| Approximately 55% of extended warranty users claim it paid off their unexpected repairs. | AutoTrader |
| Warranty costs can add up to 10% to 20% of a car’s total price. | Edmunds |
| Extended warranties often have deductibles ranging from $50 to $100. | Bankrate |
Pros and Cons of Extended Car Warranties
Weighing the advantages and disadvantages can clarify the true value of extended car warranties.
Pros:
- Cost Savings: Covers costly repairs, which can save you money in the long run.
- Peace of Mind: Reduces stress about unexpected mechanical issues.
- Added Value: Can potentially increase your car’s resale value with a transferable warranty.
Cons:
- Exclusion Clauses: Not all components are covered, leading to out-of-pocket expenses.
- High Costs: Some warranties are expensive and might not be worth their price if you don’t use them.
- Fine Print: Complex terms and conditions can be confusing or misleading.
Key Takeaways
- Extended car warranties provide coverage beyond the manufacturer’s warranty, mainly for significant repairs and replacements.
- Costs, coverage, and exclusions vary by plan, so careful comparison and understanding of terms are essential.
- Statistics reveal mixed feelings about extended warranties, with some users finding them beneficial and others regretting their purchase.
- Weigh the pros and cons to determine if an extended car warranty is a worthwhile investment for your vehicle.
FAQ
- Is it worth getting an extended car warranty?
It depends. They are worth it if you can’t afford unexpected repairs or want peace of mind. However, if you maintain your car well, you might not need it.
- What is usually covered under an extended car warranty?
Coverage varies, but most extended warranties cover major components like the engine, transmission, and sometimes the electrical system. Always review your contract for specifics.
- Can I buy an extended warranty after purchasing the car?
Yes, most dealers and third-party providers allow you to purchase an extended warranty even after you have bought the car.
- Do all extended car warranties have a deductible?
Not all, but many extended car warranties come with a deductible, typically ranging from $50 to $100 per repair visit.
- Can I transfer my extended warranty to a new owner if I sell my car?
Most providers allow you to transfer the warranty to a new owner, which can increase your car’s resale value. Check your warranty agreement for details.