Originally posted on https://www.carchexdeals.com/are-extended-car-warranties-worth-it/
A vehicle is a long-term investment. The Energy Information Administration reports that the average age of in-use, light-duty cars in the U.S. increased to 10.3 years in 2017. We are keeping our cars longer, which means your factory warranty is most likely expired, and your aging car is unprotected from an expensive breakdown.
Extended warranties come at an additional cost to vehicle owners in return for coverage on major vehicle system repairs. Are extended car warranties worth it? When it comes to time, money, and peace of mind, extended warranties provide important benefits.
Keep reading to learn about extended car warranties that you can afford, so you won’t break the bank to get protection.
An extended car warranty, also known as a vehicle service contract, is similar to an insurance policy, except it covers the costs associated with mechanical breakdowns rather than accidents.
Unlike a true warranty, a vehicle service contract is not included in the financing of a new car. It comes at an additional price and is only valid once the factory warranty expires.
There are generally two types of extended warranty plans: powertrain and bumper-to-bumper. Factory warranties will have terms for both, but you normally choose a specific coverage level with extended warranties.
What are powertrain and bumper-to-bumper warranties?
Car dealerships and third-party providers generally offer both types of warranties. Sometimes, they also offer “in between” coverage levels that are more comprehensive than powertrain warranties but still more basic than a bumper-to-bumper warranty. For example, CARCHEX offers five levels of coverage (Bronze, Silver, Gold, Platinum, and Titanium) that start from basic powertrain coverage and progress to full vehicle coverage.
Even if you purchase a bumper-to-bumper warranty, no extended warranty plan covers every single item in your vehicle. There are several exclusions to be aware of before you make a purchase. Your warranty will most likely exclude:
When you shop for an extended auto warranty, you may come across companies that require a vehicle inspection in order to purchase a plan. CARCHEX does not require a vehicle inspection, which makes plans more accessible to drivers who need them.
The average cost of an extended car warranty from the dealership is between $1,000 and $1,500. This may seem like a lot, but consider the price of common repairs.
A year-long study by RepairPal reported that average car repairs peaked at $492 in one month, which is 11% of the average American household’s monthly pre-tax income. In addition, a timing chain replacement on a vehicle like a Toyota RAV4 can cost more than $1,000 with labor.
Here are the costs of common vehicle repairs across different car manufacturers:
If you’re a driver who can’t readily afford these costs, an extended car warranty can provide reassurance and save thousands of dollars in repairs in exchange for small, monthly payments.
Many providers offer payment plans at low monthly installments, so you can budget for surprises with greater peace of mind. You can even pay deductibles as low as $0 for some plans. CARCHEX keeps coverage affordable (as low as a few hundred dollars) by using our buying power to find the most competitive plans for our customers.
There are a multitude of hidden benefits behind extended auto warranties. Many of them have nothing to do with alternators or gaskets at all.
What other perks make extended car warranties worth it?
Why choose a third-party warranty company over your vehicle’s dealership? The answer is flexibility. When you use a third-party warranty company, you get more options from more warranty administrators, so prices go down. You’ll also get the flexibility to choose from thousands of repair facilities, rather than being forced to drive all the way to the dealership.
Take Lexus extended warranties, for example. The dealership only offers three extended warranty coverage options with pricing options solely from the dealership. However, CARCHEX offers five coverage levels from competitive plans, and you can choose from 30,000 repair facilities.
Don’t lose out on all of the benefits of an extended auto warranty. Use your contract to its full potential by following these important guidelines:
When you purchase a vehicle service contract, there are several steps you should take to get the most from your plan.
Third-party extended warranty companies market insurance-backed plans from trusted administrators who can prove that they have the cash-reserves available to make payments. Therefore, you don’t have to worry about losing your money if the obliger can’t pay for the repair.
No matter what vehicle you drive, CARCHEX can help you find an extended warranty plan that suits your car and your lifestyle. Are extended car warranties worth it? With CARCHEX, they certainly are. Call 877-225-7247 to get a free quote or fill out the online form.
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