An extended warranty on a new car can be expensive. Whether or not it’s worth it is a question that depends on your particular needs and how long you expect to keep the vehicle. Some drivers find peace of mind knowing that their car is covered even after the manufacturer’s warranty expires, which can be worth the extra cost.
However, it’s also possible to save money by skipping the warranty and paying for any needed repairs out of pocket. That way, you won’t have to worry about an unexpected repair bill crushing your budget. If you’re disciplined enough to put the money that you would have spent on an extended warranty into an emergency fund or other savings, you might not need a car service contract at all.
It’s also important to consider whether a manufacturer-backed warranty plan makes more sense than one offered by an independent third party. Some dealer-backed warranties require you to have your car fixed at certain repair shops, while others limit coverage to specific parts or time periods. In some cases, a dealer-backed warranty plan will include benefits like roadside assistance or loaner vehicles that you wouldn’t get with an independent third-party warranty.
Buying a warranty isn’t necessarily a bad idea, but you should take the time to thoroughly read the terms and conditions before making a decision. Lawyers write warranties very carefully, so you might be surprised by what is and isn’t covered. If the warranty claims to cover “bumper-to-bumper” repairs, you’ll want to check to see if there are any exclusions.
You should also be careful to look at the customer reviews and BBB ratings of the companies that offer extended warranty plans. A reputable company will care about its customers, which may be reflected in the level of service you receive if you ever need to contact them.
Some people have trouble sleeping the night before their car’s manufacturer’s warranty ends, because they fear that major problems will pop up and drain their wallets. If you’re a person who has trouble staying asleep at night for the same reason, a car service contract might be a good idea for you.
The most important thing to consider is whether an extended warranty will actually pay off. Many people end up not using their warranties, so they’re just spending money on something they don’t need. If you’re worried about costly repair bills, you might be better off choosing a model with lower repair costs and putting the money that you would spend on a warranty into an emergency fund or savings account. This will help you sleep soundly without worrying about expensive repair costs. should i buy extended warranty on new car