Auto Warranty Basics

When you buy a car, there are few factors that you have to consider, auto warranty being one of them (here is a beginners guide to auto warranty). All cars come with a warranty that is included in the price of the car and covers certain repair and defective cost. What about when this warranty expires? All cars these days are loaded with expensive and complicated technological features. And the chances of something being faulty is quite high. You don’t want to risk it. Hence, comes Extended Warranty to the rescue.

The manufacturer’s warranty or bumper-to-bumper warranty expires after a certain period. For some cars it maybe after 3 years or 36000 miles, for some it maybe 10 years or 100000 miles. You can increase the period of warranty by buying an Extended Warranty.

As the name suggests the warranty is an extension to the original warranty that is given by the manufacturer of the car, although the coverage and other factors differ. It is a service contract as you have to pay an extra amount and purchase it separately.

It is best to purchase this warranty either at the time of purchase of your vehicle or before the expiration of the original warranty. Why? This is because there will be significant increase in the cost of the warranty if you purchase it after the expiration.

The extended warranty is of two types:-

1) Dealership extended warranty.  

2) Third party extended warranty.

Here are a few points you need to consider before you buy an extended warranty.

1) Take a good look at the coverage that your first warranty is offering and then match it with the time period you want to keep your car for. The car maybe for a temporary purpose, you maybe moving to another place in a few years, or maybe you like to change cars, the reasons can be endless. The point being, if you are going to keep the car only for a small span of time, the chances are the manufacturers warranty will suffice. However if your car is going to stick by you through thick and thin, you might want to extend the warranty.

2) It is important that you have shopped for the best deal for the extended warranty just like you would for your car insurance. Research over the internet, look for quotes and go prepared when you are making the final deal at the dealership. If the paperwork and other formalities are over-whelming enough, don’t buy it right away. You can settle for the manufacturer’s warranty and buy the extended warranty anytime before your original warranty expires. Which means you have a couple of years in hand. Most of us make a hasty decision and regret it later or let the salesman talk us into doing it. Avoid this, go prepared.

3) You should have a fair understanding of what is being covered in the extended warranty. Many extended warranties have coverage in tiers. Bronze, Silver, Gold, Platinum and Titanium. Bronze being the most basic coverage and Titanium highest coverage. Make sure you pay attention to the fine prints mentioned below or after the contract. It may seem ridiculous but it will give you information that the sales person won’t.

4) Check your deductibles. Deductible is the amount that you have to shell out each time you have your car fixed. It can be on a per claim or per visit basis. The deductibles on extended warranties are usually lower than the ones on the initial warranty. Most extended warranty deductibles may range from $100 to $50. You may get a $0 deductible too if you qualify for it. Although this is very very unusual. Sometimes you may have an option to choose your deductible. A higher deductible means a lower plan cost and vice-versa.

5) It’s good to get a warranty that is transferable because it a brilliant selling point for when you plan to give your car away. This means that the person who buys your car can enjoy the benefit of the warranty and that works for your benefit while you are selling it.

6) Some extended warranties have limitations as so where your car can be repaired. Some expect the car to be repaired only at the dealership from where you purchased the warranty. This may cause inconvenience because what if you are traveling to a distant place over the weekend or you may be moving to another city for a couple of weeks. It will be in your best interest to buy a warranty that lets you get your car serviced in more that just one place.

7) Breakdown warranty and Wear-and-Tear warrant – Some warranties may cover only break down of your car i.e only the parts of a car that break are covered. This may or may not very unlikely because breakage may not be the only reason for a car failure. The wear-and-tear warranty covers breakdown of the car due to worn out parts that may need to be replaced which is a likely phenomenon for most of us. Make a note of these variations in your warranty contract as they will prove to be very useful when you actually have to make use of the warranty.

People tend to have a bad experience with extended warranty, but it doesn’t have to be. It is you who has to decide whether you need an extended warranty or not in the first place and if you do need one, make sure to look into the nitty gritties of the contract so you make the right decision.

“Little things Make A Big Difference”


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