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  • Extended Warranty

    Consider exploring auto extended warranty options, especially if your vehicle is no longer covered by the manufacturer. The sooner you buy one after your manufacturer warranty expires, the less expensive your rate will be. In fact, it's best to purchase while the car is still young. For more info on how, when and what to buy, keep reading.

    What are Extended Warranties

    While they may go under different names, such as extended services contracts, these warranties can cover the costs associated with car repairs and some regular maintenance for a stated period of time or miles. Extended warranties aren’t part of a warranty you may automatically receive when you buy the car; you purchase them on your own.

    Coverages vary widely according to the provider, so check carefully to see what you’ll be getting for your money.

    When to Buy Extended Warranties

    Consumers can purchase an extended warranty when they buy the car―or at any point of time during the car’s life.

    Many wait to do so until the manufacturer’s warranty runs out. While that’s a reasonable choice, the longer you wait to buy a warranty, the more costly it usually becomes. That’s due to the increased chance for more expensive and frequent repairs as a car ages.

    Who Needs Extended Warranties

    Here’s where you need to make a decision. While extended warranties are a smart purchase for many, they’re not for everyone. Consider a number of factors before buying one.

    Length of Ownership

    How long do you plan to keep the car? If you generally sell your car after three years or so, drive an average amount of miles annually, and have a comprehensive, 36-month manufacturer's warranty, there’s little reason to protect yourself with an extended service contract.

    However, if you’re the type who owns a car until it’s practically an antique, or drive an excessive amount of miles every year, an extended warranty could be a good option for you.

    Repair History

    Does your car model have a track record of trouble-free operation? Or, are expensive repairs commonplace for it?

    Do a little homework by checking consumer publications or getting some feedback from a trusted mechanic about a model’s repair history. If a model has a record of expensive breakdowns, that’s another reason to buy an extended warranty.

    Risk Tolerance

    Do you cringe whenever your car makes an odd noise, already imagining an expensive repair bill?

    An extended warranty might be a wise choice for you. If nothing else, it will give you some peace of mind. And, it could save you thousands of dollars in repair costs.

    Repair Knowledge

    Are you capable of handing most repairs yourself? Or, is even an oil change beyond you?

    If you’re in the latter group, consider that another checkmark in favor of buying an extended warranty.

    What’s Covered By Extended Warranties

    Some extended warranties merely cover “breakdowns,” while more complete contracts also pay for “wear-and-tear” repairs. That means some will only pay for repairs to parts that actually break, and not just wear down or diminish over time. Keep in mind that many parts never break, so they won’t be covered in breakdown contracts.

    What’s Not Covered by Extended Warranties

    Even the most comprehensive policies won’t usually pay for expenses associated with exhaust systems, tires, air bags, batteries, light bulbs, glass, paint, moldings, shocks, and brake rotors.

    Also, many extended service contracts don’t cover repair costs due to overheating.

    Where to Buy Extended Warranties

    Again, another decision for you to make. Extended warranties can be purchased through the dealer or a third-party provider.

    Third-party providers typically offer the least expensive warranties, and give you the flexibility of having your car repaired at a variety of shops. However, some of these companies have dubious histories filled with denied claims, while others don’t have the financial strength to last long. And, if your third-party provider goes out of business, your extended warranty is usually worthless.

    So, if you go this route, inquire into the company’s financial stability (by checking with A.M. Best or Standard & Poor’s) and payment history, if possible. And, shop around online to find the best values in terms of price and coverage.

    Meanwhile, dealer-offered service contracts usually offer greater stability. But, these warranties tend to be more expensive, and often force you to have the repair conducted at the dealership. So, if your car breaks down when you’re out of town, you’ll be stuck paying the bill.

    Some dealers sell third-party policies, too. So, if you buy your extended service contract while at the dealership, be sure to ask who is backing the policy―the dealer or another company.

    Other Factors to Consider

    If you decide to buy an extended warranty, be aware that some warranties require you to pay the repair bill upfront―reimbursing you later―while others pay the shop directly.

    You’ll find deductible options ranging from zero to hundreds of dollars. Deductibles are classified as per-visit or per-repair; the former can result in fewer out-of-pocket expenses.

    Some extended warranties can be transferred if you sell the car, which is a nice feature that can facilitate a sale. Additionally, some contracts pay for towing or rental car expenses while you car is being fixed.

    Most extended warranty contracts require you to perform routine maintenance in order to keep the policy valid; these conditions vary with the provider.

    Types of Extended Warranties

    Powertrain

    In most cases, this warranty covers the transmission, engine and all related moving parts like CV joints, drive axle and timing belt. Some dealers will also toss in air bags and seat belts.

    Bumper-to-Bumper

    This warranty covers any part of the vehicle not protected by other warranties. Parts generally include audio systems, major electrical components and air conditioning. Be sure to check with your dealer for exact specifications. This warranty is also known as "New Car," "Factory Coverage" or "Premier Plus."

    Full Coverage

    This is the most comprehensive out of all warranties. It covers many major parts and often includes roadside assistance, towing, rental car reimbursement and common wear and tear. Despite the name, however, it does not cover all components. Be sure to read the fine print before signing.

    Components

    This is a good alternative to a full coverage policy, protecting designated components at a good price. Make sure you know exactly what the warranty covers, before you sign.

    Roadside Assistance

    This plan provides help with flat tires, dead batteries, towing and locked cars. Depending on your dealership this may be offered in the Bumper-to-Bumper package, or as a separate warranty.

    Batteries

    Bumper-to-Bumper warranties often cover batteries. Although some dealerships do offer separate battery warranties, usually lasting two to three years.

    Hybrid Components

    These warranties, as the name implies, cover hybrid components like HV batteries, battery control modules and hybrid assist motors. Coverage is lengthy, usually up to eight years and 100,000 miles.

    Rust or Corrosion

    This warranty covers you against rust-through problems with the vehicle's sheet metal. Protection usually comes with no mileage limits. In most cases, surface rust is not covered.

    Emissions

    There are two types of coverage: performance and design and defect. The performance warranty kicks in if your vehicle fails an emissions test during the first two years or first 24,000 miles. Some emission components, however, may be protected for up to eight years or 80,000 miles.

    Design and defect protection is also good for two years or 24,000 miles, depending on which comes first. Under this warranty you're covered against manufacturing design defects.