Getting an extended warranty for a new car is like getting extra security on any high-end electronic purchase. Getting an extended warranty for used cars should be no different, but most get stuck on the cost. Chances are you're buying used to get a good deal, but you won't know how good it is until much later.
A used car extended warranty is more like an extra insurance policy. The real warranty is what comes with the car by default. Extended warranties give you something to fall back on when that one expires or to cover more than basic repairs.
You can find extended warranties in two different categories: manufacturer and third party. The most common extended warranties will be from the dealership where you are buying your car. You can likewise purchase a third party extended warranty from various insurance agencies.
Let's take a closer look at these warranties and see if they are the right fit for your used car purchase.
As mentioned above, the most common used car extended warranty will come from the dealership. There is a convenience in having everything billed and handled by the dealership you're purchasing from. There are some drawbacks, of course.
One of those drawbacks is having no choice on where you can go to get your car serviced. This means no price-comparing and possibly getting stuck with bad/rude/slow mechanics. These warranties may also lack the approval by the automaker, which could mean not having access to equipment/resources specific to your model of car.
Dealership warranties can range from basic bumper-to-bumper coverage up to full engine, ECM, and drivetrain repair.
Manufacturer Warranties
A manufacturer's warranty, also known as an OEM warranty, is the original coverage that came with the car. This includes limited b2b and powertrain coverage. Any major engine or ECM failures will be covered, as well as electronics inside.
Dealerships will often represent their authorized extended warranty as a manufacturer or OEM warranty. It's a solid warranty deal that is worth considering for a used car purchase.
It's not all just about pricing and convenience, of course. Here are the top six reasons why you need to get an extended warranty on used cars.
1. Aftermarket Accessibility
This includes dealership warranties not authorized by the manufacturer, but we are talking specifically about aftermarkets bought elsewhere. Third party coverage can vary wildly and come with a variety of rules and exclusions. Since these extended warranties aren't covered by the manufacturer, they may not use OEM parts.
In some cases, though, aftermarket parts are superior and so is the coverage. The deductible you pay might cost you a little bit more than manufacturer warranties, though. It is also not uncommon for their coverage to be in the form of a reimbursement.
This isn't to say that aftermarket coverage is untrustworthy, they just might not be able to process claims as fast as larger dealerships. The warranties themselves can be obtained at a cheaper price, though. These are things you will have to consider when shopping for extended coverage.
It is also probable that your used car extended warranty is only available through aftermarkets.
2. The vehicle is No Longer Under Warranty
The factory warranty for most new cars is three years or 36,000 miles, whichever comes first. Even if some old lady barely drove her car in three years and sold you it with 10k miles, you should get it extended. The only reason you shouldn't is if you don't think you'd beat the manufacturer maximum number of miles.
For most of us, 10,000 miles in one year is easy to hit. Just do some rough math of how many miles you'll do traveling to/from work. Now, if it's a nice round number, say a 30min drive, multiply that by 3-5 times, depending on your driving habits.
Even a conservative driver can pull 2,000 miles in one month, which is well over the restrictive manufacturer policy.
3. Modern Cars Need More
Your average dealership extended warranty isn't covering all the internals of a modern vehicle.
There are different tiers of extended warranty for used cars. The cheapest and lowest coverage only gets you major engine and transmission repairs. These repairs already cost a lot, even without coverage, so you're getting a good deal for any car older than ten years.
Standard coverage starts to include basic electrical wiring, brakes, steering, and air conditioning repairs. As you get into the highest tiers, you'll finally see the most exhaustive coverage that includes your onboard electronics, navigation, seat controls, etc. Most higher tier extended warranties include 24/7 roadside assistance, rental cars, and more.
It is important to recognize that fixing high-tech systems will be expensive. If you depend on your navigation or own a hybrid car, you're going to want a warranty that will cover these expensive repairs.
4. Warranties can be Cancelled
Unlike most insurance plans, extended warranties can often be canceled and refunded. In fact, you probably shouldn't buy an extended warranty if it offers no way out. Sometimes these warranties are bundled with your loan if you're making the purchase at the dealership.
In the case of bundled coverage, a cancellation will lower your principle, rather than cutting you a check. The dealer will then reduce the number of payments needed to pay off the car, but they won't lower the monthly payments.
The cancellation process is usually not something that can be done in one day. You will need to fill out the paperwork, which the dealer then submits to the financier. This process can take weeks, if not months, depending on the timing and the urgency of the dealership.
5. Extended Warranties for Long-term Ownership
This next reason goes both ways, you'll want an extended warranty if the car has a lot of miles on it if you plan on putting a lot of miles on it, or both. The great thing about extended warranties is that you can buy it for very long stretches. A 10-year, 100,000 extended warranty is perfect for a moderately used car that you plan on owning for a long time.
If you can get an extended warranty like this for an older car, you'll probably more than make your money back in the first few years. The catch is that most aftermarket insurances won't offer coverage like that for cheap. One little-known secret about extended warranties is that they cost the dealer a base amount.
If the dealer is getting a good deal on bundling warranties from the manufacturer, they will often sell it as a "free" upgrade. This makes longer or better coverage more tempting for buyers. At the end of the day, though, these warranties are negotiable, it is in your best interest to figure out whether you need the highest form of coverage that is offered.
6. You can Afford Coverage
Continuing off that previous point, extended warranties can be found from multiple sources, so you don't have to settle for whatever the dealer offers. Each company has their fair share of advantages, depending on your needs and budget. For example, you could opt for a company that offers lower deductibles for repairs you can't afford coverage for. There's plenty of room to haggle, usually.
Some extended plans have a maximum payout amount, so keep this in mind when shopping for cheap coverage. You can purchase extended coverage from most loan specialists and insurance agencies. Regardless of whether you don't get your car financing from them, numerous credit associations and banks can offer you some type of administration contract.
Before you settle on where to get an extended contract, you'll need to closely assess what is taken care of and think about expenses between what is offered. Make certain to incorporate the estimation of any additional items, for example, roadside help, into your math.
Obtaining an extended warranty isn't the correct move for each auto customer, yet a huge number of customers who have acquired and utilized them are happy they did.
In the event that you are considering purchasing an extended warranty, set aside some opportunity to comb the fine print on the agreement to ensure the warranty does what you need it to and doesn't have hidden fees you're not willing to juggle.
With that said, you can get a free quote from us to get you started in the right direction.
At Infinity, you have a lot of freedom to choose what you want, when you want it, and how much you can afford. We want you to feel safe and secure in your used car. That's what makes an extended warranty for used cars so great
