If you purchase a new or used vehicle from a dealership, there’s no question about it … you’ll be asked if you want to also buy an extended car warranty. And, depending on the dealer, you may be coerced into thinking you have to have it in order to fully protect your vehicle.

Before you find yourself in this situation, it’s worth your while to learn more about how an extended car warranty works. Only then will you truly be able to decide for yourself whether or not it’s worth the extra money to purchase one.

What IS an extended car warranty?

Most new vehicles on the market today come with a manufacturer’s warranty. Although they vary greatly in specifics, these warranties let you know that the manufacturer stands behind their work. They will pay for certain covered repairs during a specified time period after purchase (typically, 3 years or 36,000 miles, whichever comes first).

For an additional fee, you may purchase an extended car warranty on either a new or used vehicle. Usually, this covers specified repairs after the original manufacturer’s warranty has run out. However, sometimes there is overlap between the two.

Pros and cons of an extended car warranty

No one likes to spend more money than they have to. And, buying a new or used vehicle can be stressful enough without adding in more expense. That’s why it’s important to understand why you might want to buy an extended car warranty and why it may not be worth your while.

The pros …

• Peace of mind – This is the main reason why car owners purchase an extended warranty. They want some assurance that if something major goes wrong with their vehicle, they won’t have to come up with the money to repair it.
• Potential money savings – Most extended warranties cover major auto repairs, ones that could be very expensive to fix. If the cost of the warranty is less than the cost of these repairs, you could actually save money by having one.

The cons …

• The warranty isn’t used – A lot of people who buy an extended car warranty don’t end up using it. This often happens if major repairs simply aren’t needed or they get rid of the vehicle before these repairs do come up.
• It costs more money – Sometimes, the cost of covered repairs is actually cheaper than the price tag on the warranty. This means you could actually save money by simply paying out of pocket for the needed repairs.
• Not everything is covered – Even with an extended warranty, you may come across vehicle repairs that aren’t included. That means you could still be stuck with a large repair bill that you weren’t expecting.
• Service location – Your extended car warranty may require that covered repairs be completed at a specific dealership or auto repair shop. That could leave you having to cover a large bill if you’re out of the area when repairs are needed.

Get top quality auto repairs at an affordable price

If the list of cons above seems longer than the pros, you’re absolutely right. Many vehicle owners find that the extra cost of an extended car warranty simply doesn’t outweigh the benefits of having one.

Instead, you may be better served by establishing a solid relationship with an honest auto repair shop in your area. Find a mechanic you can trust and a shop that offers fair prices, payment plans (when needed), and top quality auto repairs and you’ll be able to take care of your vehicle just fine. And, your wallet will be happy, too!