A vehicle service contract, which is commonly known as an extended warranty for car owners, is an optional protection plan you can purchase to help cover repair costs. An extended vehicle warranty typically starts once the manufacturer's warranty expires, but in some cases, the two protection plans overlap. Since your factory warranty will end at some point, you might consider purchasing an extended warranty to help defray unexpected costs — but do you really need one?
Car Warranty: Overview
According to a survey conducted by Consumer Reports, 55 percent of respondents who purchased an extended warranty never used it, and only 25 percent said they would buy an extended warranty again in the future.
Although extended warranties sound like a good idea in theory, that extra protection can get expensive. Your warranty might also fail to cover everything that could go wrong with your vehicle, giving you no financial return on your investment. In some cases, the cost of repairs ends up being less than the cost of your extended warranty. As such, it may be more prudent to set aside a rainy-day fund for unexpected automotive repairs.
Of course, it does make sense to have an extended warranty in certain situations. Before buying one, however, make sure you understand what's covered. When possible, choose one that covers your vehicle from bumper to bumper. If you purchase an extended warranty for a car that already has a manufacturer's warranty, the extra protection cannot be used for 1000 miles or 30 days, whichever comes first.
Always read the fine print and be aware of your car's own warranty requirements. With some warranties, you'll need to visit a specific auto mechanic or choose a repair shop in your network. Any warranty requires you to bring your vehicle in for routine maintenance. Failing to adhere to your outlined maintenance schedule can render your warranty null and void.
Typically, vehicle maintenance responsibilities required by your warranty include:
- Oil changes.
- Filter changes.
- Tire rotations.
- System checks.
- Manufacturer scheduled maintenance.
It's also important to use the recommended gasoline type for your vehicle. Using the wrong octane rating can damage your engine and void your warranty.
Best Extended Car Warranty Companies
Consumer Affairs lists many reputable extended warranty providers, including:
- General Motors
- AA Auto Protection
- Trustmark Warranty
- America Auto Care
- Infinite Auto Protection
- Concord Auto Protect
One of the most well-known, however, is the AAA Warranty. This cost-effective plan offers comprehensive coverage after your original warranty expires. Some of the benefits of the AAA Warranty include:
- Available zero deductible plans
- Convenient repair locations
- Direct payments to your repair facility
- Rental car assistance
- Transferrable coverage
Extended Car Warranty FAQs
Are car warranties similar to health insurance coverage?
In some ways they are similar. A vehicle warranty is like a health insurance plan in that you must stick within your network of automotive mechanics or repair shops like you would healthcare providers. Depending on your warranty's terms, you may need to pay for repairs upfront and have the service company reimburse you later.
What happens if I take my car to a repair shop outside my network?
Any repairs made to your vehicle outside your network are either not covered or only covered up to a certain amount. Before purchasing an extended warranty, make sure the available network of automotive technicians and repair shops works for you.
How can I avoid voiding my vehicle's warranty?
The biggest reasons people lose their warranty are reckless driving, maintenance neglect, and vehicle modifications. As long as you drive safely and adhere to your recommended maintenance schedule, you shouldn't have any problems. However, warranties can also be voided by:
- Accidents
- Natural disasters that total the vehicle
- Installing custom modifications
What is a vehicle service contract?
A vehicle service contract is the same as an extended warranty. These warranties not only offset repair costs, but often cover the costs of parts, labor, and even taxes.
Why do I need an extended warranty?
If you plan on owning your vehicle beyond the factory warranty's expiration date, an extended warranty might be a smart option. The right warranty will help you save money on repairs as your vehicle ages and requires more maintenance. Plus, since warranties are transferable between owners, your vehicle will look more attractive to prospective buyers.
Extended warranties offer many benefits, including:
- Roadside assistance
- Repair coverage
- Rental car reimbursem*nt
In some cases, you may be reimbursed for part of the manufacturer's deductible if you have both a factory warranty and extended warranty and the repairs are covered under the factory warranty.
Is an extended warranty worth the cost?
That depends on your situation. Consider how much money you've spent out of pocket on vehicle costs and compare that to the average price of an extended warranty. If you're worried about not having enough savings to pay for unexpected repairs, Credit Karma suggests that extra protection might be worth it.
When comparing different car warranties, consider:
- Coverage options
- Cost
- Reliability
- Customer service
Remember, it's important to choose an extended warranty that covers a broad range of vehicle systems and parts. Special coverage options, such as rental car benefits, should also factor into your decision.
When should I purchase an extended warranty for my car or truck?
In most cases, you'll want to buy an extended warranty before the manufacturer's or dealer's warranty expires to avoid any gaps in coverage.
Can I get an extended warranty for a used vehicle?
Yes, most extended warranties are designed for preowned vehicles because new cars are covered by an initial factory or dealer warranty.
What are the drawbacks of extended car warranties?
Despite the many benefits, extended warranties aren't for everyone. Common drawbacks include:
- Large deductibles
- Limited coverage
- State exclusions
- Unnecessary coverage overlap between an initial warranty and an extended warranty
- Lack of use — many people never use their extended warranty
- Stringent service requirements — you'll have to have your car serviced at certain facilities
- Depreciation clauses — the more mileage your car has, the less money your warranty will provide for repairs
- Lack of reliability — if the company or party supplying your extended warranty goes out of business, you won't be reimbursed
At the end of the day, an extended warranty for your car or truck might be a smart move. Weighing the pros and cons of each coverage option can help you determine whether an extra vehicle service contract is in your best interests.
Information and research in this article verified by ASE-certified Master Technician Duane Sayaloune of YourMechanic.com. For any feedback or correction requests please contact us at research@caranddriver.com.
Sources:
https://www.consumeraffairs.com/auto_warranty/
https://www.creditkarma.com/auto/i/extended-car-warranty
https://northeast.aaa.com/financial/auto-loans/extended-warranty.html
https://www.consumerreports.org/car-repair/get-an-extended-warranty-for-your-car/
https://www.caranddriver.com/features/a28924863/buying-cpo-pros-cons/
https://www.caranddriver.com/news/a30677698/hyundai-warranty-complimentary-maintenance/
