Extended Car Warranty – A Detailed Review
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Do you own an expensive car? Is your car backed up by a warranty? Well, if not, you might have to pay unwanted higher repair bills! An extended warranty is just like a life jacket; the only difference is that this life jacket is designed for the safety of vehicles. Driving a car that has not warranty is just like swimming on a stormy day without wearing a life jacket. You’re exposed to all kinds of danger and you might even drown.
What most people don’t know is that an extended warranty is very important for all vehicles. Whether you’re driving a 1999 Jaguar or a 2015 Mercedes, an extended warranty plays an important part in your journey. Having said that, extended warranty is only cost effective and useful if it is utilized effectively.
It was revealed in Consumers Report Survey that almost 55% individuals who purchased an extended warranty package never used it at all. And the percentage repeat purchase was, as a result, very low. In such cases, extended warranty plans are not useful at all.
In order to reduce overall repair costs and maintain your budget, it is important that you make use of the extended warranty plan throughout the year, whenever your car needs it. Otherwise, you will only spend more without getting any sort of return and that is not a very clever approach.
An extended warranty, however, covers most of the technical issues that a car might have during its life, it is true that not all issues are covered under most extended warranty packages. The manufacturer warranty usually lasts for just a limited time period but it covers much more than a typical extended warranty coverage plan. But when it expires, your car is exposed to all kinds of threats and if by any chance it gets damaged or suffer from a technical issue, the repair costs can turn out to be higher than Mount Everest.
Not all people can afford such high maintenance costs and to stay far away from such inconveniences, it is better that you purchase an extended warranty for your vehicle.
Extended Car Warranty
Basically, an extended car warranty is a backup plan that you can purchase for your vehicle once its manufacturer warranty expires. It reduces the expense burden and allows you to keep your car as new as it was when you first purchased it. A typical extended warranty plan covers almost everything, including: Braking system, Engine, transmission, AWD, 4X4, Driving Axle, Turbo, Air Conditioner, Supercharger, Electronics and much more.
It is important to know that even though an extended warranty aims to cover everything related to automobiles, there are still many services that are not covered by most companies. This may include routine maintenances, changing of old tires, replacing old parts that have deteriorated overtime.
However, some extended warranty companies do provide additional benefits to their consumers such as a 24 hour roadside assistance which means that you’re never alone. Whether you’re driving during the day or late after midnight, help is always just a phone call away so you won’t have to worry about being stranded in the middle of nowhere, helpless and frustrated.
One point to be noted here is that the extended warranty comes with a cost. It’s true that extended warranty helps you save a lot but this saving itself has a price which will be covered in detail below.
The opportunity cost of buying an extended warranty plan
Buying an extended warranty has two main costs: The physical cost that you pay in form of money and the opportunity cost that is not really visible but is important. First let’s talk about the physical costs you have to pay for buying an extended warranty plan.
The cost of an extended warranty depends on many different factors: How old your car is, the kind of plan you’re selecting, the services you require, the brand of your vehicle, terms and conditions of the company, warranty period etc.
Typically, to buy an extended warranty plan, you will have to pay between $1000 to $4000; this amount can slightly vary depending on the factors mentioned above. You might have to pay additional costs in form of interest if your extended warranty cost is merged with an auto loan plan but this completely depends on you.
Now moving on towards the opportunity cost of buying an extended warranty plan, the amount consumed by the coverage plan could be used for other purposes or even for your vehicle itself. If you’re not using the extended warranty plan effectively, the amount used would just go to waste. Instead, it could’ve been used as a reserve for the maintenance expenses.
Advantages of buying an extended warranty
Extended warranty comes with many benefits that can prove to be very helpful for car owners. Some of these benefits are listed below to give you a transparent view:
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Save Money: The best part about having an extended warranty is that you can save a lot on your next car repair. Why? Because with an extended car warranty you will only have to pay the some part of the total cost, rest is covered by the company. This means that if your car repairs cost $500, you might have to pay only a $100. Isn’t that amazing?
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Roadside assistance: Some companies provide additional benefits which includes a 24/7 roadside assistance. This means that you can drive your car all day without worrying at all!
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Good Quality services: When you buy an extended warranty plans, you know that the company will focus most on the quality of services they provide so you won’t have to worry about the kind of repair work being done on your vehicle.
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Your vehicle stays new: Yes, this is true, with an extended warranty plan you can keep your car as new as possible and you know what that means? You can drive your car for a longer period of time!
Cons of an extended warranty
Along with numerous advantages, extended warranties also have some disadvantages. Here’s a list that you must read:
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Cost: Although extended warranty provides you with many benefits, it has a cost. The cost is worth it only if the plan is used effectively otherwise the cost might turn out to be higher than the total benefits you’ll ever get.
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Not everything is covered: An extended warranty does not cover everything. Most companies aim to provide an all in one solution to their customers but even after that they are not able to cover every technical issue and that is when additional spending may be required.
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Cost coverage: Mostly, an extended warranty only covers some part of total cost; the rest has to be paid by the owner. The coverage depends on different factors and sometimes it might not be very ideal.
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Ineffective use: Many people who buy extended warranty plans never use them. If this is the case, extended warranty plans will only become a source of additional unwanted costs as they will not be utilized effectively.
Ending Note:
Buying an extended warranty is a good decision only if you plan to use it throughout the year effectively. Extended warranty plans can bring many benefits and provide you a worry free solution for many complicated issues and not only this, an extended warranty can help you save a lot on repairs, maintenance etc.
It is important that the benefits of buying a warranty are compared with the cost and the best package is purchased from the best company. Without calculating the worth of an extended warranty, you might not get the satisfaction that you actually want!
There is absolutely no doubt about this. Extended car warranty really is an amazing thing we all can do to our valuable cars. My car is my graduation gift and this year I got extended warranty for it. Trust me this really comes with lots of benefits. It keeps the car new as said in this blog. Worth it!