Author: Adam Luehrs / Source: fivecentnickel.com
Car repairs always seem to come at the wrong time. What’s more, one single problem with a vehicle could cost you thousands of dollars straight from your pocket.
When you first purchase a car, it can seem like the clock is ticking down to that manufacturer’s warranty expiration date with lightning speed.
That timer starts as soon as you drive away from the lot. And, really, that warranty doesn’t cover your car for very long. So maybe you’re wondering if an extended car warranty really pays off in the long run.
An extended warranty certainly does look like an attractive option. This is especially true for people who don’t want to be surprised by high repair costs when a major component of their vehicle breaks down.
So, should you also grab a warranty when you grab the keys to your new car? Let’s take a look at the pros and cons of signing up for extra protection when you buy your next vehicle.
What Is an Extended Car Warranty?
Many people are confused about how an extended car warranty differs from actual auto insurance.
An extended auto warranty is essentially a service contract designed to offset the cost of repairs unrelated to a car accident (that’s what your auto insurance is for!). You can obtain an extended warranty for either a new or a used vehicle.
An extended car warranty shouldn’t be confused with a manufacturer’s warranty. The extended plan is designed to kick in and provide coverage only after a manufacturer’s bumper-to-bumper warranty has expired.
Typically, dealerships offer extended warranties when you purchase your vehicle.
But most of the time, third-party companies are the ones actually administering the warranties. This means they may or may not actually be backed by the automaker behind the particular car you’ve purchased.The Positives
What’s good about an extended warranty? For one thing, it can be a lifesaver if your car experiences an issue with a main component like the engine, transmission, or air conditioner. These are big repairs that come with hefty bills. Unless you’re saving up separately for unexpected auto expenses, a blown transmission could destroy your emergency fund in a single afternoon.
Learn More: Rebuilding Your Savings After An Emergency Expense
Plus, an extended warranty is typically easy to pay for. It’s usually added to the cost of a vehicle when you make the purchase. This means you will pay a simple lump sum instead of dealing with monthly or annual payments.
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