Your car’s warranty covers any unpredicted mechanical or electrical failure. Extending your warranty is beneficial if you plan to keep your vehicle beyond the standard manufacturer’s warranty period.
What happens when your dealer’s warranty expires?
Any electrical or mechanical breakdowns become the owner’s liability when the manufacturer’s warranty expires. So, unfortunately, you’ll be paying out of pocket – which can be extremely costly. Not many people have the necessary cash to fix these things – unless you have a savings account expressly set aside for car maintenance and repairs. Depending on what part breaks down, you could end up high and dry with a broken car that is too expensive to fix.
That’s where extended warranty insurance comes in. You can extend your contract to give you comfort and lighten the risk of footing the bill in the case of part failure. An extended warranty is significant for people who rely on their car for work. In specific jobs (like sales representatives, for example), you can’t afford to be without a car. In addition, warranties often include the added value of a rental car while your vehicle is being fixed. This provides an additional safety net.
Also, remember that while an extended warranty insurance is a great safety net, not all manufacturers have the same warranty claim rate as others. Therefore, choosing a manufacturer with a lower warranty claim rate will affect variables like the extended warranty cost and the probability of needing to use the warranty. So although a low warranty claim rate doesn’t ensure that your vehicle won’t break, it lowers your risk.
Everything you need to know about extending the warranty
If you’re planning to keep your car for a longer duration than your manufacturer’s warranty, it’s a good plan to extend your warranty before the original contract expires
There are two types of extended warranties: a pre-owned guarantee and an extended warranty. For example, suppose your original manufacturer’s contract runs out, with a period of no cover before you raise the security. In that case, you’ll only qualify for a pre-owned warranty that is not as comprehensive as an extended one.
With a pre-owned warranty, each part is individually limited in value (covering only a certain percentage of the cost). An extended warranty is more expensive but offers you more comprehensive benefits. It’s better to extend your contract before it expires so that you qualify for unlimited warranty coverage.
Not all warranties are designed equal
Not all extended warranty insurance covers the same things. Most cover the key components, but the level of cover you receive differs depending on whether you opt for a comprehensive or limited warranty. The primary manufacturer’s warranty isn’t always the same, depending on which vehicle brand you buy. So when choosing a car, look for brands that offer you a comprehensive warranty. This gives you the same level of coverage for all parts for the duration of the contract.
Similarly to a limited warranty, a pre-owned warranty gradually decreases as the car ages – providing you less cover each year. Some components are pulled out entirely, and by the time you reach the end, you only have over 30% of the cover you had to begin with. If you extend the limited warranty, your extended warranty will start at only 30%. This means you need to pick your manufacturer wisely upfront.
Whether you extend your car warranty through your manufacturer or a third-party insurer, the manufacturer-endorsed extended warranty is your best bet. The dealer uses up-to-date parts pricing and delivers a detailed claims analysis. Third-party estimates are not as accurate and, as a result, can be overpriced.
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