Should You Buy That Extended Car Warranty?

Buying a car comes with lots of considerations. And while most people settle for the dealer warranty, you might want to consider something extra. This is especially true if you're planning on keeping your car for more than a few years.

In this article, we'll explore:

• Why most people don't opt for additional warranty coverage.
• What a warranty actually covers.
• Car warranties vs. car insurance.
• Why insurance matters, regardless of your warranty.

Setting the Scene for Why a Good Car Warranty Matters

Imagine this scenario: You've had your car for a few years and it has 50,000 miles on the odometer. You're cruising down the highway one afternoon with the air conditioning  going full blast... and it dies. 

You pull into the first repair shop you find. You have a broken A/C compressor. It's a costly repair that is not covered under the original factory warranty that came with your car.

This is where you start kicking yourself for not opting for an extended warranty.

You had the chance to purchase the extended warranty, but you didn't. Why do so many people opt out of the extended warranty? There are a few reasons:

• It seems like a waste of money at the time.
• It was too much money after the car payments.
• It isn't "worth considering" at the time you buy the car.

Truth be told, purchasing an extended warranty at the same time you purchase the car can be wasteful. If you don't end up keeping the car as long as you expect, it isn't always worth the money. If the car is unreliable and you decide to get rid of it, you'll be happy you didn't waste money.

However, there are some situations where it makes sense to go for the extended warranty.

Car Warranty Basics

Every car comes with a factory warranty. This is the manufacturer's warranty. Simply put, it's a legal warranty that covers your car for a certain period of time. 

The most common warranty is for 3 years and 36,000 miles. Many also come with a 5-year, 60,000-mile power train warranty. Once this initial coverage is up, you may have limited coverage for a bit longer, or no additional coverage at all.

And remember, your car warranty is different from car insurance. 

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Car Warranties vs. Car Insurance

Car warranties and insurance might seem similar on the surface. They both provide coverage when things go wrong. But there are many differences between them. It is important to know what kind of coverage you can expect with each, especially when buying a new car.

Auto insurance is for accidents, not breakdowns. This can include car accidents along with other events, such as the car being flooded or damaged in a hailstorm. When this happens, the insurance company is there to help you figure out how much damage occurred and whether the car can be repaired. In some instances, the car may require replacement if the amount of damage exceeds its value.

Warranties focus exclusively on fixing problems with the vehicle. For example, if your car is within the warranty and develops a loud noise in the front suspension, you bring the car in for warranty repairs, not call the insurance company.

Is Additional Coverage Past the Manufacturer Warranty Important?

For some people, not having additional coverage isn't much of an issue. Generally speaking, people who own basic cars don't need extended warranties like those that performance cars do. 

After all, extended warranties may end up being more costly for owners of more basic cars in the long run. It makes sense when you think about it: more features = more potential problems.

So, why would anyone want an extended warranty? There are a few reasons:

• Even basic cars today are more complex: As technology improves, basic cars have more features that could break over time.
• Convenience: An extended warranty means you won't be bothered when things go wrong.
• Budget control: You know what you're paying with an extended warranty, but you don't know the potential cost of all future repairs.
• Retain value: People don't consider that an extended warranty means a car is kept up over time, and therefore worth more down the road. It's an investment in your car.
• Why not?:  If it sounds like a good idea and it is in your price range, you've got nothing to lose.

If you think an extended warranty is for you, you should explore your options. There are insurance agents that sell extended warranties. You don’t have to buy from the agent at the dealership. 

Independent insurance agents can help you get an even better price.

Car Dealerships May Try to Sell You Additional Coverage beyond the Extended Warranty

A dealership may also try and sell you car insurance, gap insurance or credit life insurance.  The general rule is that insurance policies are also better purchased from an independent insurance agent who can customize a policy to fit your unique needs. Independent agents will be there to help you with claims too, unlike dealer representatives.

Get the Right Coverage for Peace of Mind

If you are seriously considering buying an extended warranty for your car, an independent agent can help guide you through the process and shop around for the best price and policy. If you need better car insurance, your independent insurance agent can help with that, too.

If you've got coverage needs, we have you covered - warranties or otherwise.