Whether your car is brand new or well used, you're hopefully taking it in for regular maintenance and repairs. But are you prepared for a sudden repair expense, not covered by car insurance? Here we discuss extended car warranties and answer the question: What does an extended warranty cover?
The extended warranty takes effect after the manufacturer's bumper-to-bumper warranty has expired. While a manufacturer's warranty is included in the purchase price, an extended warranty is sold separately.
Statistics show that approximately 55 percent of people who purchase the extended warranty do not use it during the lifespan of the policy. The median price for the warranty also stood at slightly above $1,200. On average, vehicle owners who used the extended warranty spent more on the warranty than what they saved in costs of repairs.
What is the purpose of an extended cover if it leads to an increased cost? The question that arises is, "what does an extended warranty cover and should you get one?" Have a look at the facts as follows to make an informed decision.
How Does an Extended Warranty Work?
You are at a dealership, and the dealer is trying hard to sell you an extended warranty. All he is telling you is some horror stories about the costs that you might have to incur in replacing the transmission or engine. You are almost coughing some extra money for the warranty.
While this article is not to tell you not to purchase an extended warranty, it will help you make a wise decision.
An extended warranty can be bought at the time of sale or sometime later after the purchase, but before the expiry of the manufacturer's warranty. The warranty picks up repair coverage for a specific number of years after:
- The manufacturer's allowable mileage has been reached
- The duration of the manufacturer's warranty has been attained