The cost of an extended warranty varies, and so does the amount of coverage offered. It’s typically more expensive for a plan that covers more repairs and lasts longer, such as a bumper-to-bumper warranty or powertrain warranty. A vehicle’s age and estimated mileage can also impact the price of a warranty. Whether the cost is worth it can be determined by reviewing the car’s expected lifetime and comparing it to the cost of the warranty.
Manufacturers usually offer warranties for their new cars, which can last up to three years or 36,000 miles. After that, you can purchase a warranty from an aftermarket company (which also sometimes refers to it as mechanical breakdown insurance) to extend the manufacturer’s coverage and reduce the risk of costly repairs. Depending on the type of plan, it may cover only certain components or last up to a set number of miles. A powertrain warranty, for example, commonly lasts five years or 60,000 miles. A bumper-to-bumper warranty is a more comprehensive option that covers all parts of the vehicle.
Some aftermarket warranties require you to pay upfront and get reimbursed, while others directly bill the repair shop for a covered service. If you choose to use an aftermarket warranty, it’s a good idea to read reviews and compare pricing to ensure the provider has a strong reputation for customer satisfaction and fair business practices.
Purchasing an extended warranty is a personal decision that comes down to your budget and comfort level with car repair costs. While an extended warranty isn’t right for everyone, it could help to ease financial stress and protect against unexpected expenses.
Another factor to consider is how long you plan to keep the vehicle. If you’re planning to sell it or trade it in within a few years, it might not be worthwhile. However, if you intend to keep it for many years, a warranty can add to the resale value and increase your peace of mind.
Should I Buy an Extended Warranty on a New Car?
An extended warranty is a good idea if the car you’re considering has an older model or one with a history of mechanical problems. It’s also a smart move for vehicles that have already passed the 100,000-mile mark, as the likelihood of costly repairs increases at this point.
Ultimately, it’s best to shop for a car with reliability in mind and follow manufacturer recommendations for maintenance. That way, you can save the money you’d spend on an extended warranty and put it toward a down payment or other upgrades.
The most important thing to remember is that a warranty should never be the sole reason for buying a car. Rather, it should be a complement to a sound financial strategy that includes an emergency fund and a savings account. If you do decide to buy an extended warranty, make sure the price is negotiated and that it’s rolled into your loan. You should also check the warranty’s fine print to make sure it doesn’t include any stipulations that would nullify its benefits, such as not following recommended maintenance schedules. should i buy extended warranty on new car