Mechanic Advisor

How to Buy an Extended Car Warranty That Will Actually Pay Off

Posted October 17, 2016 by Stefano De La Cuesta

When you purchase your vehicle you are already making a big investment and an even bigger risk. Whether you get your vehicle new or used, certified,or pre-owned the chances are that you, like most drivers are probably planning on keeping that car for a while. That means you are looking into ways to protect such an investment in all the ways you expect. One of the things that could be beneficial to you is to look into an extended car warranty. Cars need care and maintenance over time and eventually may break down at an inopportune time., both financially and personally. Whenever you pay for a repair out of pocket, it involves more risk in addition to being expensive and troublesome. The coverage and protection afforded to you by an auto warranty is one big way to help avoid risk and reward yourself with savings along the way; they practically pay for themselves.

You may be thinking about holding off on coverage until your car gets older or hits a certain mileage. This is a mistake because it is dangerously close to forcing you to pay for all repairs out of pocket. This is an even bigger issue nowadays since rates for auto warranties increase, as your car gets older and you drive more miles. Similar to how insurance companies examine loss ratios and re-rate their prices regularly, you should never hold off too long before you seriously consider coverage, otherwise the cost/benefit ratio may be less favorable. Not to mention that, as your car gets older, it becomes much more likely to experience a break down.

However, is there still such a thing as “too soon”?

Of course, you should keep in mind that no vehicle manufacturer is plotting some sinister conspiracy in the hopes that your car eventually fails.  However, an open secret is that most manufacturers’ warranty periods are designed and intended to cover the period during which the vehicle most likely will remain in its best working condition. At the end of the day, it wouldn’t be financially wise or fair for a third-party to cover repairs that are already covered by whatever warranty that comes with your car. Instead, a third-party warranty may “wrap” around the existing manufacturer’s coverage to provider more comprehensive coverage, or provide coverage when the manufacturer’s warranty expires.

So once you’ve decided on purchasing coverage, how do you make sure it pays off as an investment?

Focus on Coverage Before Price – The cheapest price is not always worth it. You should instead look carefully and thoroughly while comparing what is/isn't covered and see if it meets any and all of your needs. It goes without saying that you should avoid overpaying but you need to be doubly sure you are not sacrificing coverage for a slightly lower price, most "too good to be true" prices, often are just that.

Negotiate a Better Deal – Most warranty providers give their customers wiggle room with their pricing. After finding a plan you like, check the payment options and ask if you qualify for any discounts! You would be surprised what you may qualify for.  Much like when you bought the car itself you should never hesitate to try to work with your warranty salesperson on finding a price and payment plan that satisfies your needs and theirs.

Waiting Period - Most policies have specific rules and regulations regarding waiting periods to avoid dealing with customers that have pre-existing conditions prior to purchasing a policy. Typical waiting periods may be 30 to 60-days or 1,000 miles.

Avoid Alterations - Some of us may be a little more into cars than others and love to make our vehicles an extension of ourselves. So that means the occasional indulgence into customization and aftermarket work on the vehicle. The issue with that hobby is that there are some modifications or alterations to vehicles that can void the contract or lead to an increase in price of the total contract. You should ask as many questions to your provider as possible and familiarize yourself with the rules regarding this specific topic to avoid paying both for the modification and then the higher premiums.

Talk to a Trusted Mechanic – We at Endurance always advise our customers to take their plan to a trusted automotive expert or repair facility as they familiarize themselves with their coverage. Whomever and wherever you choose to look over the contract, you will have a full 30-days to not only look over your policy but to better ensure the level of coverage fits your needs before you decide it is right for you and stick with it.

Far too many divers and vehicle owners feel secure after their warranty has expired because modern cars are getting more reliable with ever model year. Since most cars are better made than they have been before it has become increasingly common to find cars with over 100,000 miles. Just a few years ago that was not the norm. Reliability is on the up and up leading people to believe there is less likelihood of a breakdown and that they won’t ever need an extended warranty. This type of thinking is unwise. It is because you are more likely to keep your car longer since it is made better that the risk involved with owning your goes up. The longer you keep something like a car around the more likely it is to require repairs. The question you should ask yourself of whether or not you need coverage is indeed dependent on your personal situation. These days it should be noted that with the cost to repair today's high tech vehicles only rising as the tech and engineering capabilities becomes more advanced and complex, do you really want to get stuck with expensive repair bills down the road?

The simple truth is that for even if you use your coverage once, it may end up paying for a repair that would have matched cost of the plan itself.