An extended warranty, also known as an extended service contract, are presented as a way to financially protect yourself from expensive car repair bills. Like insurance, you must pay for the extended warranty (typically monthly included in your car payment) whether you use it or not. Most contracts include a deductible. At first glance an extended warranty contract may look enticing but best practice is to investigate and educate. You are well-advised to have your attorney review the contract – even if you pay your attorney $300 to advise you it is money well-spent. There are good extended warranty providers and some that are not so good. The not so good providers put so many limitations and stipulations in the contract that it is not worth the money you pay for it.
Like any optional insurance coverage, extended warranties have quite a few pros and cons.
The smartest financial decision is to create a savings account dedicated to car care. Once you are able to save $5000 or more dollars in an account dedicated to maintaining and repairing your vehicle you now have a buffer zone, this is a great way to reduce the stress of car care. Another great benefit of this tactic is once the money is saved – It’s still yours if you don’t have to use it for an unexpected repair bill. You haven’t had to pay it out to a warranty company nor are you paying interest on the face value of the warranty contract.
There is no right answer to the question of an extended warranty, only whether it makes sense for you. Consider your budget, your car buying habits, your maintenance choices, your road trips, and your ability to absorb a pricey repair bill. If you do choose to buy an extended warranty, read the fine print carefully and pay your attorney to help you understand the contract and your obligations.
If you are tired of getting the runaround and being treated like you haven’t got a clue, we invite you to try Colchin Automotive instead. Give us a call at 303-431-5421 for all of your automotive needs!