One thing used car buyers want more than a good deal is reliability. According to Consumer Reports, nearly 95 percent of buyers place it as the first or second on their list.
But the challenge is that many buyers are not sure how to determine if the used car they are planning to buy is reliable or not. As such, many buyers decide to purchase additional coverage for their used car.
If you’re unsure about where you start, you might want to research olive extended car warranty solutions as this will give you an idea of how these programs work and from there you can continue your research.
One thing you will find is that while these contracts do not always offer bumper-to-bumper coverage, they can provide coverage for major repairs such as engines or transmissions.
As such, the investment in an extended warranty is about buying peace of mind – one that limits the potential financial risk. However, it turns out that some car buyers might have paid more for their extended warranty than they need to.
How does this happen? Two reasons, buyers do not understand the average cost of repairs, and buyers also tend to favor low deductibles over something more reasonable.
The result is that they are paying for coverage they will never use, and this can turn people off to the legitimate use of extended warranties for used cars.
As such, a good rule of thumb is to understand the coverage you are getting and how much you can afford to pay for a major repair. Also, you will want to ask yourself how relevant your car is.
Do you need your vehicle to earn a living, or is it a sort of luxury? If it turns out that you do not need your car for work, then you might not need to get an extended warranty – or a car.
If you are still uncertain about getting an extended warranty, then you might want to consider setting up a fund for emergency repairs instead.
The plus is that this fund will be your money, meaning if you do not use it for car repairs, then the savings could be available for other purposes.
However, setting up an emergency fund requires discipline as you need to get into the habit setting aside the same amount of money every week. This could prove an issue for those who do not have regular work or have problems setting up and sticking to a budget.
Keeping this in mind, the purpose of an extended warranty is to limit financial stress tied to owning an older vehicle. As such, these programs are offered by car dealers, insurance companies, and auto clubs.
The plans might also be called “mechanical breakdown insurance,” as the purpose is to cover mechanical breakdowns literally.
The fine print matters, regardless of where you purchase your extended warranty. This is because these aftermarket programs have limitations on the types of repairs and even the amount covered.
In some cases, you may also be required to bring your car to a qualified service center for your repairs.
Also, some aftermarket programs can offer perks such as battery replacement, rental coverage, and free towing. As such, these programs can blur the line from traditional warranties to extended coverage.
However, when buying a used car, you might want to check out how much of the manufacturer’s warranty remains in the vehicle.
This is because some manufacturers warranties now run as long at 10-years, meaning that even the oldest cars of the road might have some level of warranty coverage remaining.
So, is an extended warranty worth it? The answer depends on the age of the car, how you plan to use it, and what you can afford. For older vehicles or those that you need for work, then you might want to consider some form of coverage.
For those who can not afford an extended warranty, they might want to think about cutting back the coverage just to focus on the engine and the transmission, choosing a higher deductible, or setting up a savings account to cover the future expenses.
In addition, you want to make sure you shop around. Even if you think getting an extended warranty is a good idea, you might not want to take the dealer’s offer at face value.
This is because dealers often get a commission on every extended warranty they sell, which means you have an opportunity to get a better price.
Lastly, only include the cost of an extended warranty in your car loan as a last resort. The reason is simple, financing your extended warranty ends up adding to the principal amount of your loan and could end up costing you money when it is time to sell your car.