If you purchase a used vehicle, one option that you may want to consider is to purchase an extended warranty as well. In most cases, you don’t have to purchase the extended warranty at the same time that you buy a car, but there are some potential benefits of handling both purchases at the same time. To help you get the best deal on an extended warranty, here’s what you need to know:
What Is An Extended Warranty
An extended warranty is something like an insurance policy for your vehicle, but instead of covering damage from a crash, the extended warranty covers the cost of repairs. As with insurance, when you purchase an extended warranty, you’ll pay a monthly premium, and the level of coverage you have will affect your monthly payments. You may also have a deductible with an extended warranty, but deductibles don’t usually go over $100.
Extended warranties are normally purchased through a dealership, and they may be available through a third-party company or from the vehicle manufacturer. The general consensus is that extended warranties offered by vehicle manufacturers are superior since repairs are normally done using original equipment manufacturer (OEM) parts and by mechanics specifically trained to work on your vehicle.
However, manufacturer warranties are normally more expensive, and manufacturers do provide warranties that allow for replacements with aftermarket parts. If you want an extended warranty that will ensure that only OEM replaced parts are used, be sure to verify that is the type of coverage you’ll be getting.
What Do Extended Warranties Cover?
Again, just like with an insurance policy, the level of coverage you’ll be provided will depend on the type of warranty that you choose. There are basic warranties that only cover your car’s power train, and there are also warranties that are bumper to bumper, meaning that they essentially cover all possible repairs. Some extended warranties will offer a middle ground between a power train and a bumper to bumper warranty.
It’s a good idea to determine just what types of repairs will and won’t be covered under your warranty. This will help you figure out the value of a warranty to you and ensure that you’re not surprised by a lack of coverage if you don’t opt for a bumper to bumper warranty.
Can Extended Warranties Be Financed?
One reason that buying a warranty at the time that you’re making a vehicle purchase can be beneficial is that the cost of the warranty may be able to be added into the cost of purchasing your vehicle. This means that you’ll be able to pay for your warranty in increments instead of having to come up with a lump sum. Depending on the lender, you may even be able to obtain a zero percent interest rate on financing your extended warranty.
If you’re not able to obtain interest-free financing, it might be a good idea to consider purchasing your extended warranty later on. According to the Federal Trade Commission, in most cases, there’s no requirement to purchase a warranty when you purchase your vehicle. If you are told that you must do so, it may be a good idea to call a lender to verify that this is the case. There are some dealerships that will tell you there’s an obligation to purchase a warranty with a vehicle in an effort to boost their sales numbers.
How To Lower The Cost Through Bargaining
If the dealership that you’re purchasing a vehicle from offers an extended warranty that you are interested in, you don’t just have to accept the price that they quote. As with just about everything else at a dealership, there’s a markup involved, so you have some room to negotiate the price down.
To help determine what you should be able to expect to pay, it’s a good idea to call around and get estimates for extended warranties on the vehicle you’re interested in purchasing. If you get a quote from a dealership that is significantly higher than what you’re quoted elsewhere, you know you’ve got a lot of room to work with. Generally speaking, the amount that most dealerships are willing to sell extended warranties for is about $100 to $200 above the cost to the dealership.
If you’re financing the extended warranty, you may want to get the dealership to work with you to find an amenable monthly or out the door price. This price should include the cost of interest you’ll accrue until the automobile is paid off so you have an accurate idea of what you’re spending. Once you’re done negotiating, ask for a breakdown of exactly how much you’ll be paying in total for your automobile, your extended warranty and any add-ons. This will help ensure that other expenses aren’t being padded.
Finally, if you do decide to get an extended warranty after you’ve purchased your vehicle, be sure that you get the warranty while your car is still under the manufacturer’s warranty. Even if extended warranties are available after your car is no longer covered by the manufacturer, the cost of extended warranties usually go up dramatically after the OEM warranty expires.