As you shop for a used car, dealers will often try to sell you an extended warranty on the vehicle. Some of the coverage options include original equipment manufacturer warranties (OEM), extended car warranties called vehicle service contracts, and Mechanical Breakdown Insurance (MBI). Whether or not to purchase an extended warranty on your used vehicle is a big decision that should be made carefully. In this article, we will look at some of the pros and cons of extended warranties so you can make a wise choice.
A good time to consider an extended warranty is if the make and model of your vehicle has poor reliability ratings or you know it’s prone to certain kinds of repairs, like transmission issues. Adding an extension to your car’s warranty may be worth it in these situations because it can save you from having to pay for expensive repair bills out of pocket.
Another instance where an extended warranty is a good idea is if you’re buying a car that has high mileage. Cars with higher mileage are more likely to need major repair work, so an extended warranty can provide peace of mind. Some of these plans also offer lower deductibles to help you save money in the event that you need to pay for a repair.
However, if you have thousands of dollars in savings or are able to borrow money for a car repair should the need arise, then an extended warranty isn’t necessary. In addition, most extended warranties don’t cover repairs resulting from driver error or wear and tear.
You should also carefully consider the terms of an extended warranty before purchasing it. The contract may limit where you can have your car fixed or even cover the cost of a deductible, which can significantly reduce the amount you receive in benefits. Lastly, some of these warranties have depreciation clauses that lower the value of your car by a certain percentage over time.
Some of these plans also have limited transferability if you decide to sell your car in the future, which can decrease their appeal. Finally, you should check with the dealer to see if they will negotiate on the price of the extended warranty.
It’s important to weigh the costs of an extended warranty against your personal risk tolerance, financial situation, and the car’s reliability history before deciding. Taking the time to research your options is key and with web based tools like olive(r), you can do all your extended car warranty research from the comfort of your home or right at the dealership. This will make you a savvy car buyer and help you avoid costly mistakes. should i buy extended warranty on used car