When it comes to buying a new car, the last thing you want to worry about is having to spend thousands of dollars on repairs. A warranty is an easy way to take some of that stress off your shoulders and let you drive with peace of mind. However, is it worth it? It depends on several factors, including your driving habits and your financial situation.
A vehicle service contract, or extended warranty, is an agreement between you and an auto repair company that covers certain costs for your car. It can vary in length and coverage level, as well as price. These warranties are typically offered by dealerships, auto clubs, and insurance companies (who also sometimes refer to them as mechanical breakdown insurance).
Before purchasing one, be sure you understand exactly what it covers and how much it will cost. Then, shop around to get the best deal. Make sure you compare prices, reviews, and the reputation of the company offering the warranty. Checking with the Better Business Bureau and your state’s Office of the Attorney General are also good places to start.
Do You Have the Money to Pay for a Warranty?
The upfront cost of an extended warranty can add up quickly. This can be especially true if you roll the cost into your automobile loan, which means that you’ll have interest to pay on top of the service contract. Additionally, you may find that the value of your vehicle decreases over time, which can leave you paying more for the warranty than what it’s worth.
Are You Prepared to Follow the Manufacturer’s Maintenance Guidelines?
Taking the time to keep your vehicle in excellent condition is crucial, and an extended warranty can help you do that. But remember that most warranties will only be valid for a specific period of time, and most require you to follow the manufacturer’s maintenance guidelines precisely in order to qualify for coverage. If you’re not willing to do this, a warranty is probably not for you.
Is a Warranty Transferable When You Sell Your Car?
Many dealers offer extended warranties that can be transferred to the new owner when you’re ready to sell. This can be an attractive selling point for potential buyers, and it can increase your resale value. But be aware that some third-party warranties are not transferable, and transferring one of these may cost you extra.
In the end, it all boils down to your individual financial situation and driving habits. If you’re comfortable with risk and have the money to pay for a warranty, it might be worth it. However, if you’re not, it might be more cost-effective to save up for those repairs in an emergency fund instead. Or, if you plan on selling your car soon, consider keeping the money you’d have spent on an extended warranty in an auto repair savings account. This can be used for future repairs or toward the purchase of your next vehicle. is extended warranty for car worth it