Extended Auto Warranty Questions
Purchasing an extended warranty is one of the best ways to avoid unexpected costs if your vehicle ever breaks down during the first years of ownership.
Like a little insurance policy, you may or may not use it, but you'll be glad you have one if your vehicle ever has any mechanical issues.
Extended coverage is not for everyone, policies differ in price and coverage. So exactly how do you know which one's right for you?
Below is a list of questions AutoCheatSheet.com has comprised to ask yourself if buying a warranty policy is right for you.
Warranty questions to ask yourself:
- Do I have to buy an auto warranty from a dealership?
- When should I buy a warranty?
- Are warranty prices negotiable?
- Do I really need an extended warranty?
- Have I comparison shopped for the best price?
- What kind of deductible does warranty have?
- Which type of auto warranty should I purchase?
- Can I get a warranty if my factory warranty is expired?
- What if the bank will not finance my warranty?
Do I Have to Buy a Warranty from a Dealer?
The short answer is NO! Dealers and their staff want you to believe you must buy a warranty at the time you buy a car. This is NOT TRUE, you can purchase coverage from any company you choose at anytime you want.
When Should I Buy a Warranty?
You can wait until your factory warranty is about to expire however we don't recommend it. The longer you wait, the more expensive it will be. A couple of the key factors a warranty company looks at is the vehicles age and how many miles it has. The newer the vehicle and lower miles equals less risk for the warranty provider.
Are Extended Warranty Prices Negotiable?
A little known fact most people are unaware of is warranty prices, just like automobiles, are negotiable. Most car dealerships will take a $800 warranty and mark it up to $2500 or more before offering it to the consumer.
They will then want you to "ROLL" the additional cost into your car loan and by doing this will end up costing you even more. Going into a car dealership not armed with this knowledge will cost you financially.
Read our section on how to negotiate an extended auto warranty with a car dealership.
Do I Need an Extended Warranty?
Before buying an extended warranty for your vehicle ask yourself these questions.
Will I keep the vehicle for a long period of time?
This is the most important question you can ask yourself. If you're one of those people that get tired of your vehicle every three years and don't drive that often. You probably do not need to purchase an extended warranty.
If you're leasing a vehicle for 36 months or less you don't need an extended warranty. The dealer will still try to sell you one but don't do it, it's a scam!
Most Manufacturer's warranties will cover any major mechanical breakdowns for three years and 36,000 miles. With the Manufacturer's warranty still in effect, buying an extended warranty past that point is a waste of money.
If you're one of those people that puts a lot of miles on a vehicle quickly or drive a car until it falls apart. You may want to consider purchasing one for the added coverage and peace of mind.
Have I comparison shopped for the best price?
Most extended warranties sold through new and used car dealerships are actually through a third party and the dealer is acting as the middle man. Many dealers own the company providing the coverage and they've set up the company under a different name to give the consumer a sense of security.
The cheapest extended warranty may not be the best coverage for you!
The cheapest extended warranty may not be the best warranty for you and your driving needs. Always comparison shop for the best price before buying one at the last minute from a car dealerships finance department.
The best place to comparison shop is online. There are many warranty companies that will provide you with free no-obligation price quotes on any type of vehicle.
Arming yourself with quotes from these two companies is a good starting point. Even if you choose not to go with either of these companies you can still use the quotes to negotiate a better price with a dealership.
Read our article on how to get free extended warranty quotes online here.
How Much is the Warranty Deductible?
Always research how much and what kind of deductible you are responsible for before you sign the contract. Some warranties have a deductible per repair item and some have deductibles per repair visit.
Per repair item deductible - The overall cost of these types of extended warranties may be cheaper up front however you will have to pay a deductible for each covered repair item you have fixed on your vehicle.
Per repair visit deductible - The overall cost of this type of extended warranty may be a little higher. However you will only be charged a single deductible no matter how many covered repair items you have fixed under your warranty.
An example of the above deductibles would be this:
Let's say you have a $100 per visit deductible. You take your vehicle in for an alternator, starter and fuel pump problem. Your deductible would only be $100. If you had a per repair item deductible you would be charged $100 for each item or $300.
Another thing to be aware of about warranty deductibles is how much is the deductible? Warranty deductibles can range from $50 to $250 or more? The higher the deductible normally means the cheaper the overall cost of the warranty. Do your research when finding the one that best fits your budget.
There are $0.00 deductible policies out there. You may have to pay a little more or a surcharge to get this type of coverage. However if you find yourself taking your car in frequently or want to have the peace of mind not having to come out-of-pocket in the future. You may find this kind of policy to best fit your needs.
What Type of Auto Warranty Should I Buy?
Although extended warranty companies may call their policies by fancy names. They can pretty much be all condensed into three different categories.
Named Component Warranty - Also known as an inclusive warranty, this type of coverage is pretty much black and white. It will cover the major mechanical breakdown or major mechanical systems of your vehicle. Basically, if the part is not listed on the contract then it will not be covered by the policy.
Powertrain Warranty - This type of extended warranty only covers the engine, transmission and certain parts of the drivetrain. Powertrain warranties only cover the parts in which oil flows through the vehicle (internally lubricated parts) . As past statistics show, these parts of an automobile are the least likely to fail.
Please remember a car has thousands of static and moving parts. A powertrain warranty does not cover these "other parts." Some people question if a powertrain warranty is truly an extended warranty?
Exclusionary Warranty - Also know as a bumper-to-bumper warranty, this type of policy covers nearly all of the mechanical systems of a vehicle except for the parts listed on the policies "exclusion list."
The exclusion list will have all the parts or systems NOT covered by an exclusionary warranty. It's in your best interest to find and review this list carefully to make sure you have the parts you will want covered on your policy.
CAR BUYING TIP - Companies will sometimes sell auto warranties very similar to each other. Salespeople may call them all by the slang term "Bumper-to-Bumper" not knowing any different and this can be misleading to the consumer.
Never take anyone's word for what a warranty covers. When inquiring about an extended warranty it's better to ask, "What is not covered, rather than what is covered by the policy.
Most normal wear and tear items (consumable items) such as belts, hoses, windshield wipers and brake pads are never covered on auto warranties. You can get added perks such as travel reimbursement, roadside assistance and travel lodging. Make sure you ask and understand what all is included when selecting a warranty.
Read AutoCheatSheet.com's article on how to select an extended auto warranty click here.
Can I get a warranty if my factory warranty is expired?
Yes you can. Many people don't realize their vehicle may still be eligible for extended coverage after their manufacturer's warranty has expired.
Once a manufacturer's warranty expires is when a vehicle is more prone to have mechanical and system failures. Most vehicles under 10 model years old and 150,000 miles are still eligible to receive some kind of extended coverage.
Keep in mind the older your vehicle gets and the more miles you put on it, the more expensive the warranty will be.
What if I can't get my warranty financed?
On rare occasions a bank may not finance the added amount of an extended warranty on a car loan. Sometimes a car dealership will mark up a warranty so high the lender will not finance it because the "Loan-to-Value" is, for lack of better words, out-of-whack.
If a car dealership or lender tells you they're unable to include the extended warranty in your car loan. You may want to look at it as a blessing and do some comparison shopping online. Online companies such as CARCHEX and Endurance Vehicle Protection offer low interest payment plans.
You may find the perfect extended warranty at a cheaper price and not have to pay the high interest rates the dealer was attempting to charge you.
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My Recommended Sites for Car Shopping
Autopom! and Endurance Vehicle Protection are the quickest way to see what an extended warranty will cost you for the vehicle you're buying. These online sites will provide you with free, no-obligation quotes and the prices are normally pretty good. You can also use these quotes to negotiate an even better price with a dealership.
Continue to AutoCheatsheet.com's Extended Warranty Terms and Definitions >>