Want help deciding whether or not to purchase an extended warranty for your car? Knowing the answers to these five questions will help you make an informed decision.
What are the key things to know about auto warranties?
What are some common warranty types and what do they cover? There are typically two types of coverages:
Should I purchase an extended warranty?
The first thing to think about is how long you plan to keep the vehicle. If it is for a short time, then purchasing an extended warranty is probably not a good financial decision. Second, what is your risk tolerance? If you want to protect yourself from possibly having to pay for high-cost and/or unexpected repairs, then an extended warranty may be a good purchase. It’s a personal choice. Some consumers prefer to buy an extended warranty for every qualifying product they purchase, while others choose not to spend the additional money.
What is the difference between a warranty and a vehicle service contract?
They are essentially the same thing with the exception of the related laws imposed by the governing state in which the policy is sold. Some states consider a warranty an insurance product and as such, it must be filed with the state and regulated by the state’s insurance commission.
What are the pros and cons of warranties and vehicle service contracts?
One pro is they protect you against high auto repair bills. On the con side, you pay for a product that you may never use.