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Car Buying Tips >> Car Warranty

What to Consider When Considering an Extended Warranty

An extended warranty, or service contract, can help you manage the expense of car repairs and service in the event of failure. These warranties can be purchased directly from the dealer or from a third party. Many can be purchased online.

If you are considering an extended warranty give some thought in advance to your goals. Extended warranties can be helpful for many, but they are not practical or necessary for all. Consider the following:

1. Will your warranty include car rentals, roadside assistance or food and lodging? These can be important features if you travel a great deal and your car breaks down when you are away from home.

2. In some instances the extended warranty may not be necessary because it does not provide any additional coverage. You should check with the dealer to learn what warranties, if any, are included with the purchase price of the car. If the service contract you are considering duplicates the warranty (which comes with the car and is included in the purchase price) it probably won’t serve you.

3. Will your deductible cover each service incident regardless of the number of items or components to be repaired, or will you need to make a separate deductible payment for each?

4. Will your warranty provide for new parts or reconditioned, i.e. “like new” parts? If you will not be getting new parts find out what guarantee you will be offered with regard to dependability of the reconditioned part.

5. Will it be cheaper to cover repair costs as they arise? For plans with only basic coverage or that don’t cover normal wear and tear, you may find that the warranty is not always worth the price. If research shows your car to be reasonably dependable you may want to forgo warranty costs and save the money in an interest bearing account instead. Chose an account that offers you easy access to your money, without penalty, while paying attractive interest rates.

6. Is the claims process user friendly? If it’s difficult to get through to a live person that may be a red flag signaling that you should look elsewhere. Also, ask about the process step by step. Learn about authorizations, for example, when and if they are required, how long before you can expect an answer? Ask too about what happens if you must file a claim after normal business hours.

7. Is the warranty transferable? This can be an important question if you don’t intend to keep the car long.

8. Under what conditions is the warranty invalidated?
Extended warranties, or service contracts, ideally provide peace of mind and security for one your most valuable possessions – your car. If a careful examination of your situation and the warranty at hand reveals little significant benefit, don’t be afraid to pass…or keep looking.

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