A vehicle warranty is an insurance policy against unexpected repair costs. But is additional, optional coverage worth the expense? Let’s look at the question at the new car dealership and the used car lot.
Are they worth it for new cars? Possibly, but…
As its name suggests, an extended warranty (or vehicle service contract) extends your car’s factory warranty up to a designated mileage level. An extended warranty could save you money over the long term if:
- You’re a “drive it into the ground” type who’d rather keep a car for as long as you can.
- Financial considerations require you to hold on to your car longer.
- You’re still making car payments after the factory warranty expires (for example, your car has a 36-month warranty, but you have a 60-month loan).
BUT don’t feel like you need to buy it when you buy your new car—you CAN say “no.” We’ve said it before: You wouldn’t buy a pair of shoes if you had to wait three years to wear them. As your factory warranty approaches its expiration, you’ll hear from the manufacturer (and third-party providers) with extended warranty offers.
Are they worth it for used cars? It’s complicated.
How much risk are you comfortable with? Some people would rather buy a used car warranty and not need it than the other way around. Others would rather buy a car known for reliability, and pay for repairs when the time comes.
Extended used car warranties are available from both manufacturers and third party companies. Third-party policies may have lower premiums, but also less coverage. Also, research their reputations for claims service, speed of payment, etc.
Whether you buy new or used,
REMEMBER to carefully read the terms and conditions of any warranty offer to be sure you know what’s covered and what isn’t. And for any vehicle, your best protections against costly repairs are:
- Buy a car known for reliability (and preferably with all the maintenance records if buying used)
- Keep up with the scheduled maintenance
- Know a trustworthy mechanic.
- Know that Pen Air does provide an Extended Vehicle Warranty for peace of mind and unexpected repairs and maintenance.
Before you start shopping for your next vehicle, check with Pen Air. With lower interest rates than banks, you might be able to afford a little bit more car! Learn more at www.penair.org/AutoLoans