Extended Dealer Warranties
Most extended car warranties come in 2 varieties:
- Those issued through a dealer.
- Those backed by a third-party provider.
Each type has its strengths and weaknesses. The choice that is better for you depends on your preferences.
If you plan on keeping your new vehicle for a while, an extended warranty can prove to be a smart choice. For any parts and services you'll need down the road, you'll generally be covered by your warranty.
Additionally, you'll generally be able to finance your extended warranty into your monthly payments. While your car payments would be higher than without an extended warranty, you'll avoid having a big bill for parts and services when your car needs it.
Whenever you are thinking about an extended warranty for a new car purchase and however you are thinking about buying one, you should:
- Shop around and compare dealers and third-party providers to get the best value.
- Learn exactly what will be covered by reading the terms of your extended warranty.
- Consider how long you plan to keep the car.
- Think about your budget and what kind of monthly payments you can afford.
On this page you'll find a general overview of dealer and third-part warranties. Ultimately, the best choice for you will depend on the vehicle you are purchasing/leasing and the circumstances of your situation.
These service contracts generally offer superior stability. While some dealerships do go out of business, as a whole, dealer warranties offer greater longevity than most third-party providers. Also, if your service contract provider closes, your warranty is often useless.
Dealer warranties offer convenience, too, since you can purchase a warranty while in the showroom and talk to people face-to-face about your service contract.
Some dealer warranties are actually backed by the vehicle manufacturer, instead of the dealership. Many industry experts feel these are the best type of service contracts.
Dealer warranties offer greater consistency of quality compared to third-party warranties, although some third-party contracts provide outstanding coverage. Most legitimate claims get approved immediately.
Shop around between dealers to try to lower the cost of this warranty, and remember that service contract prices are usually negotiable.
These warranties usually offer a much better price for consumers, and some provide coverage that's on par with the best dealer policies. It's up to you to do the research to find the warranty with the best value.
Third-party warranties generally have a much wider range of repair shop choices. With a dealer warranty, the vehicle usually has to be repaired at the dealership. If the shop isn’t nearby or it’s tough to get an appointment quickly, this can be an issue. Also, if you’re out of town and your car breaks down, you can often find a repair shop within a reasonable distance that will honor your warranty.
It's smart to try to find out about a provider's claims history since some third-party providers are notorious for fighting claims.
Some dealers do sell third-party warranties. So, if you purchase a warranty while at the dealership, be sure you know who is backing the contract.
Want to learn more about extended warranties? See our Extended Warranty page.
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