After you’ve spent your savings on a down payment for a new or used vehicle, the last thing you may want to do is spend even more on an extended auto warranty. However, doing so will save you plenty of time and money in the long run. For instance, extended auto warranties protect you from costly repairs, keep your vehicle in good working order, and provide you with peace of mind.
Plus, the extended warranty will protect you in the event of a breakdown, so you won’t need to come up with the cash for costly car repairs, especially if you are on a tight budget. Many warranties will even provide you with free loaner vehicles. To learn more about the benefits of investing in an extended warranty for your recently acquired vehicle, review the information below.
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Financial Protection
When your manufacturer’s warranty expires, you may begin to worry about the cost of unexpected car repairs. However, purchasing an extended warranty for your vehicle can help to ease your worries and provide you with peace of mind. After your manufacturer’s warranty expires, an extended auto warranty can provide you with the financial protection you need to keep your vehicle running smoothly and safely. In most cases, your manufacturer’s warranty will only last a designated amount of time or until you’ve driven your vehicle a certain number of miles, but an extended warranty can protect you for an extended period.
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If you drive your vehicle more frequently than the average motorist, for instance, your manufacturer’s warranty may expire more quickly. Depending on how often you drive, your manufacturer’s warranty could expire before you’ve owned the vehicle for a year or less. However, purchasing an extended auto warranty will protect you well after your manufacturer’s warranty expires.
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Costly Car Repairs
In the U.S., the average cost of a car repair is between $500 and $600. If you’re part of the 33 percent of Americans who can’t afford to pay for a car repair without racking up credit card debt, an extended auto warranty may be a good solution for you. While the cost of an extended car warranty varies by vehicle type and condition, most manufacturer-purchased warranties range between $1,000 and $1,500.
Depending on how often your vehicle needs repairs, you could easily pay for the cost of an extended warranty after two or three minor car repairs. However, the cost of your extended warranty will vary depending on:
- Your vehicle’s condition and year. Warranties for older automobiles or those with more miles are often costlier.
- The vehicle’s, make, model and type. If you own an expensive vehicle or a luxury model, the cost of your extended warranty will be higher.
- The type of coverage you need. While comprehensive warranties are available, they are generally costlier than basic plans.
- Your deductible. If your warranty includes a deductible, your premium will be lower. If your deductible is low or your plan does not have a deductible, however, your premium will be higher.
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You Can Purchase Them at Any Time
If you can’t afford to purchase an extended warranty when you buy your new or used vehicle, you may choose to wait until your manufacturer’s warranty expires. While the cost of your extended warranty may be lowest during your first year of vehicle ownership, you can generally purchase an extended warranty at any time – as long as the car’s mileage isn’t exceptionally high. Additionally, you can purchase extended warranties from a number of places, including dealerships and most auto lenders, credit unions, banks and insurance companies.
If you do purchase your warranty when you buy your automobile, don’t finance the warranty with your vehicle. If you do, you’ll need to pay interest on the warranty and you’ll end up spending more in the long run. Instead, purchase the warranty upfront or wait until you have enough money saved up to do so.
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You Can Shop Around for the Best Price
If you feel that an extended warranty is right for you, shop around and compare prices until you find the best deal. Since extended warranties can generally be purchased at any time, you don’t need to splurge on a costly plan without doing your research. When shopping around for extended car warranties, keep the following tips in mind:
- Obtain quotes from at least two different companies
- Request faxed or emailed copies of the quotes, as this information can be presented to your dealership
- Find out which services or components are included in the warranty
- Find out how many years or miles the warranty covers
- When purchasing the warranty through a dealer, ask for the price of the actual warranty – not the cost of your estimated monthly payment
Moreover, you may choose to shop around for an extended warranty before you make the decision to purchase a new or used vehicle. That way, you’ll be prepared to purchase an extended warranty before heading into the dealership. This tactic is especially useful if you plan to purchase a used vehicle with higher mileage.
When you’re ready to purchase a vehicle, present your warranty research to the salesperson to negotiate the price of your plan. If he or she is not willing to negotiate the price of your extended warranty, purchase the plan somewhere else.
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Three Types of Primary Warranties Are Available
Before you agree to purchasing an extended auto warranty, it’s important to consider the different types of available plans. These plans range from inclusionary, to powertrain, to bumper-to-bumper warranties. For instance:
- Inclusionary warranties only cover certain vehicle components. In many cases, inclusionary warranties do not cover airbags, batteries, brakes, carpet, upholstery, exhaust, glass, paint and shock absorbers.
- Powertrain warranties cover the main components of a vehicle. For instance, powertrain coverage protects a vehicle’s drivetrain, engine and transmission.
- Bumper-to-bumper, “all-risk”, or exclusionary warranties allow you to customize the type of protection you need. With this type of warranty, most components are covered unless you specifically exclude them from your plan.
Moreover, many of these warranties are available as silver, gold or platinum tiers. When choosing a plan, be sure to find out which components and services are covered and which of them are excluded. In most cases, a good plan will give you the flexibility to determine where to take your car for repairs, and a loaner vehicle will be included in the warranty. You should also be able to transfer the warranty to a new driver if you choose to sell the vehicle before the plan expires.
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