Whether you’re buying a new vehicle or driving an older one, the cost of an extended car warranty can be significant. Dealerships often ask for an upfront payment or offer to finance the cost into your auto loan.
While a vehicle service contract may seem unnecessary for drivers with reliable vehicles or who already have savings set aside for repairs, it can be worth the investment for others.
Cost
While extended auto warranties don’t come cheap, they can help reduce financial stress for many people. They’re available through dealerships, car clubs and insurance companies (often called mechanical breakdown insurance). They can vary in terms of coverage, length, deductibles and price.
Other factors that affect warranty costs include vehicle age and mileage. Older and higher-mileage vehicles tend to break down more often, which can drive up warranty prices.
Despite the high cost of extended auto warranties, they are a worthwhile investment for most drivers. They can provide a safety net in case of expensive repairs, and they also offer roadside assistance and rental car reimbursement. However, it’s important to shop around and find a reputable provider. Many scammers advertise extended warranties over the phone, so make sure you do your research.
Coverage
An extended warranty is a good option for drivers who own cars that are past the manufacturer’s bumper-to-bumper warranties. These warranties provide protection against expensive repair costs that are not covered by the original manufacturer’s warranty. Some factors that affect warranty prices include the vehicle’s age, annual mileage and driving habits. Vehicles with higher mileage are more likely to encounter breakdowns and part failures, so they will cost more to protect.
Depending on the coverage level, deductible and length of the contract, an extended car warranty can range from $107 to $163 per month. This is based on quotes from Toco, and includes a $100 deductible. Other providers offer varying pricing and deductibles. Often, dealerships will ask buyers to finance the cost of an extended warranty with their car payments, but this can result in paying more in interest over time.
Deductibles
If you’ve ever purchased car insurance, you know that a deductible is the amount of money you must pay out of pocket before your insurer covers the rest of the repair bill. Extended warranties sometimes work the same way, and it’s important to understand what these deductibles are before you purchase a plan.
CR members have reported that Olive’s plans are cheaper than those of other top-rated providers, and the company’s website makes it easy to compare coverage levels. In addition, it offers a variety of flexible payment options, including rolling the cost into your vehicle financing. The company also has an impressive customer service rating, with high scores for transparency and easy-to-understand policy information.
Waiting period
Many extended warranties have a waiting period that lasts up to 30 days and 1,000 miles. This is intended to prevent car owners from using the warranty to cover preexisting conditions. But, some companies, like olive, offer plans with no waiting period.
Extended auto warranties provide a valuable safety net for many drivers who find that the cost of repairs after their manufacturer’s warranty expires is too high to manage without a warranty. However, the value of an extended warranty depends on how reliable a car is and whether the owner has a car insurance or emergency fund to cover repairs. Buying a warranty from a reputable provider can help avoid the scammers that have given these products a bad name. It can also save you money in the long run.
Exclusions
When it comes to extended warranties, the cost can vary based on the vehicle make and model. Dealerships often offer a warranty as an add-on to the purchase of a new or pre-owned vehicle, and it may be possible to roll this cost into your car financing. However, it’s important to remember that these warranties don’t pay for everything and may not cover all repairs.
Aside from the vehicle’s age and mileage, some factors can influence the price of an extended warranty, including the type of coverage, deductible, and waiting period. Some companies require a lump-sum payment, while others offer a financing plan or a monthly payment option.
While it’s important to compare prices, it’s also essential to consider the quality of the company you choose. A reliable car protection provider will have a seamless online experience and be transparent about coverage options, exclusions, and fees.cost of extended car warranty
