I hear this a lot. Consumers seem skeptical of purchasing extended warranties in general because they believe it's just another way to increase profits for the store. This may be true for some electronic products but high tech cars are especially vulnerable to high cost repairs.
Chances are your vehicle came with a great warranty package that covers most mechanical breakdowns and repairs. But, like all good things, this coverage will come to an end eventually, and the responsibility for repairs to your vehicle will fall on you.
The time to extend the original manufacturer warranty is well before your factory warranty expires. This will save you money over time compared to having to pay for repairs as they happen. Warranty premiums are calculated by age of vehicle and miles, so the newer the car and the fewer the miles the less you pay in premiums. I compare this to life insurance which is cheaper to buy when you are young and have no health issues.
Most vehicles today have very sophisticated computer systems that could fail without notice, and while the part itself may not be that expensive, the labor alone to remove a dashboard to get to that particular part could result in a $4,000 repair bill. Major components like an engine or a transmission will cost between $4,000 and $5,000 to repair. The more high tech features you enjoy like navigation, park distance control, cruise control, rear seat entertainment, etc., the more components you have to worry about failing. These repairs can cost thousands of dollars per visit in parts alone - not including labor. Take a look at the Edmunds.com website where they publish a “True Cost to Own” for most vehicles, and you will see for yourself the average cost for maintenance and repairs.
This is especially important when you purchase a used vehicle that is close to the end or past the original manufacturer warranty. For example, if you purchase an extended warranty for approximately $3,000, on average you will receive up to THREE TIMES the value of the premium in car repairs alone.
And that’s not all. If you decide to sell or trade your vehicle, you can cancel the warranty and get a pro-rated refund based on time and miles. You have nothing to lose and will enjoy peace of mind that your vehicle is protected long past the original warranty.
TRUE STORY: Don’t make the same mistake as one customer. She didn’t see the point in extending the warranty on her vehicle despite the fact that she absolutely loves her car and has now owned it for over 10 years. To date, service records confirm that she has paid over $30,000 in maintenance and repairs. But if she had invested in an extended warranty and maintenance plan, she could have avoided most of these bills!
CAUTION: Be wary of unknown warranty companies that solicit you at home or even on your cell phone. In most cases, this is a scam and chances are, they will collect your premium over the phone with your credit card, and you will never hear from them again or they won't be around when you need to file a claim for a repair.
Be sure to check with your local dealer, and discuss the plan to best fits your driving needs. For instance, if you drive 20,000 miles a year, you should choose a warranty with less years and the most miles. If you don't put a lot of miles on your car, opt for the most years and the least total miles. Be sure to choose the plan that offers the most comprehensive coverage instead of basic engine, transmission, suspension plans. Sure, you will pay less for the basic warranty plan, but in the end you could pay more in repairs because - it never fails - the particular item that breaks on your vehicle isn't covered.
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Girlfriend, I'm so impressed! Yes, this is helpful information and written so that it is easy to understand. That is why "You see car people" and why I come to you for advice on cars and purchasing them. You're the best!
ReplyDeleteI love it Debbie, very informative. Keep up the great work!
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