The Value of a Warranty for Your Used Car
To buy or not to buy... that is the question. A used car extended warranty is an extended service contract that covers certain repairs and issues after the original warranty expires. If you're thinking about purchasing an extended warranty, make sure you understand the extent of its coverage
Here are a few questions you should ask yourself before buying a used car warranty
- How much coverage is left on my car? Many factory warranties transfer to used car buyers at the time of purchase. So if you have one year of coverage left and you plan on keeping the car for four more years, for example, you need to decide if you want coverage for those three years. Some experts suggest putting the money you would have spent on the warranty into a savings account—and chances are you'll come out ahead.
- Is my car a certified pre-owned vehicle from the manufacturer? If so, you already have used car extended warranty protection, although the length and type of coverage will vary… so be sure to know what's covered and for how long.
- Can I handle unexpected expenses? If the cost of replacing an electrical part, A/C or transmission would wreak havoc on your budget, a used car extended warranty might not be a bad idea.
- Is my car reliable? If it is, you may want to forgo the extra coverage and costs. But it's all a gamble. By buying a used car warranty, you're betting something major will go wrong with your car. The company you're buying the contract from is betting it won't. They usually win.
- What type of warranty am I getting? There are used car warranties backed by your car's manufacturer, as well as so-called "aftermarket" warranties, offered by third-party companies. Manufacturer's warranties often cover a wide range of repairs and services, which can be done at any authorized dealership. Aftermarket warranties are often cheaper—but be careful—the quality may not be the same. Also, some dealerships may offer you a dealer warranty instead of a manufacturer's warranty, which means all the repairs and services can only be done at that dealership. If you're out of town when your car breaks down or if the dealer closes up shop, you're out of luck.