Having an extended warranty or service contract on your vehicle can be beneficial to most vehicle owners. We all want to have a reliable car, but even knowing which models are trustworthy may not be enough. Many want added protection.
Vehicle service contracts, also called extended warranties offer you an investment and peace of mind that can limit your financial risk for a set period of time. If you choose to not get an extended warranty, then you need to set aside an emergency fund for repairs. They will happen, it is just a matter of when. Worst case if you don’t use the emergency fund, it can help go towards the purchase of another vehicle when needed as well.
Extended warranties may help reduce financial stress and can help you budget many covered repairs into your monthly payment. There are many options available from Endurance, Car Shield, Protect My Car and others. The best time to purchase something like this is obviously while it is still under manufacturer warranty, as there is usually a waiting period when purchasing an extended warranty or service contract (ex. 30 days and 1,000 miles).
In addition to purchasing it while your vehicle has some manufacturer warranty left is it will be cheaper to purchase. They will also offer you a greater selection of longer coverage terms as well. Usually the best options are for vehicles with less than 80,000 miles. You should factor in though how long you plan to keep the vehicle, how many miles you drive annually and whether you can afford most repairs out of pocket if you don’t opt for an extended warranty.
According to AAA, average repairs can cost you in excess of $850. Many newer model vehicles can be costly as well, such as hybrid batteries, brakes and transmission replacement (many are unable to be serviced). many warranty protection options from providers such as Endurance offer extra services such as battery replacement, rental car coverage, oil changes and brake pad replacement. Many of these services have an allotted amount you will receive to go towards those repairs.
If you do decide to opt for an extended warranty / service contract, be sure to purchase one from a reputable company with a long history, such as an automaker or a company such as Endurance or Fidelity. Many have restrictions including what is covered, based on the plan you choose. So make sure to go over the details before you make a decision.
