Should I Buy an Extended Warranty on a Used Car?
If you’re unsure as to whether you should pay out for an extended warranty on your new used car, check out our guide
All new cars come with a manufacturer’s warranty, but under US federal law, offering an extended warranty on a used car isn’t a legal requirement. For many, the decision over whether or not to purchase an extended warranty will be about gaining reassurance that they will be protected financially against any unforeseen damages and repairs that might arise.
Nevertheless, it’s still worth doing some research on the types of extended warranty on offer. In particular, what does it actually cover; and how much will it cost each month or each year, in relation to how often you’ll be using the vehicle. Is that regular payment equal to how often you’ll actually be driving your used car? So, read on to discover all you need to know about buying extended warranty below.
Is it worth buying an extended warranty on a used car?
An extended warranty could well be worth the money if you’re planning to continue driving the vehicle once the original manufacturer’s warranty expires, whether that’s in terms of mileage or years. Much like a manufacturer’s warranty, an extended warranty covers the cost of certain electronic and mechanical repairs to your vehicle. Also note that purchasing an extended warranty with a third-party provider may deliver more comprehensive cover; since third parties aren’t confined to manufacturer limitations, they can take a wider range of hypothetical situations into account and cover your vehicle accordingly.
There are various types of extended warranties available. Some are designed to protect specific components (the powertrain, for example), while others will protect specific kinds of damage (such as corrosion caused by rust).
What are the benefits of extended warranty?
The major benefit of taking out an extended warranty on a used car is to protect your peace of mind. If you’re already on a tight budget when purchasing the vehicle, it makes sense to cover yourself financially against any potential repairs – particularly if the vehicle you’re buying is fairly old and therefore more likely to need repairs. Once the time for those repairs comes round, you’ll be paying out far less with a warranty in place. Some warranties will even pay out for any repair costs within 24 hours.
Furthermore, when you eventually decide to sell the car on, an extended warranty is likely to increase the resale value of your car.
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What are the downsides of extended warranty?
Despite the fact that in many cases it will be worth taking out an extended warranty, they can be expensive, with many plans offering only limited coverage. As such, there are no guarantees that an extended warranty will prove to be a financial benefit in the long-run. The cost of any repairs may actually turn out to be less than the ongoing cost of paying for the warranty – so you may find that you never need to make a claim against it.
In addition, it might not be worth investing in an extended warranty if the second-hand car you’re purchasing already has damage to it, or if you use your car only occasionally.
What does extended warranty cover?
An extended warranty typically covers the major parts of your car: the engine, clutch, transmission, steering system, cooling system, and fuel system.
Some extended warranties come with addition perks, such as 24/7 roadside assistance, towing costs, and coverage for a rental car – all extremely useful in the event of a breakdown.
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What isn’t covered by an extended warranty?
Depending on the type of extended warranty you take out on your vehicle, there are various parts that won’t be covered by the policy. Typically, these include:
- Normal wear and tear or degradation over time to tires, belts, and brakes
- Any pre-existing damage to the car
- Cosmetic damage to the body and interior
- Regular maintenance such as tire rotations or oil changes
- Neglect and lack of proper maintenance
An extended warranty also isn’t likely to cover issues related to accidents, natural disasters, and theft. It’s worth checking how many repairs or replacements will be covered in a given year, too, since there’s often a limit.
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How can I maximize my extended warranty?
Read the fine print of the warranty so you know exactly what is being covered, as well as the amount you’ll be expected to pay in the event an issue arises. Stay on top of your vehicle’s regular servicing so that your car is well maintained, and keep hold of all receipts related to the car’s services and repairs, since they might be needed in the event you make a claim.
