Alternative Energy Blog

It is just like clockwork. A few years after you roll off the lot with your new car, postcards start arriving in the mail asking you to extend your warranty. The question on the minds of many consumers and probably yours too is if it worth buying one of these.

The answer is really yes and no. Some extended warranties can prove well worth the price, but others simply will not provide the coverage or the value anticipated. To understand why this is not a simple black and white question to answer, it helps to understand warranties a little better.

When you purchase a new vehicle, you will be confronted with a few different types of warranties. The first one will come with the car at no extra charge and be backed by the manufacturer. This warranty will run for 36 months or 36,000 miles or maybe 70 months or 70,000 miles. No matter the case, this particular warranty will have the full backing of the company that built the car in the first place. It is also possible the manufacturer will offer an extended warranty at this point, which you can purchase for extra money.   

The third kind of warranty you may run into is called an aftermarket extended warranty. This may be offered to you at the dealer at the time of purchase. It can also be bought well after the car drives off the lot. This kind of warranty will cover certain repairs after the manufacturer coverage runs out. It is not backed by the manufacturer. Instead, a private, third-party company handles the underwriting and calls the shots on what can be repaired, how much can be spent and what garages can handle the repairs.

The postcards that come in the mail are generally for third-party, aftermarket warranties. This particular purchase can prove to be well worth the money or a massive waste of extra cash depending on a few things. Before answering a card or buying an extended warranty from an auto dealer consider these things:

How long you intend to drive your car ' If it is your plan to purchase a new car and have it around for 10 years or so, a good extended warranty could be well worth the price. Do consider paying cash when you purchase the car for this extra though or go back to a dealer a little later and buy one. The additional costs can add a lot to the bottom line when financed with interest added in. It makes more sense to pay outright whenever possible.

The reputation of the company ' Some of those cards that come in the mail are, in fact, scams. Before purchasing an extended warranty on your car, make sure the company is reputable. Manufacturer extended warranties are great, but some third-party companies do not honor their agreements as well as consumers would like.

Check things out.

The condition of the car ' If the manufacturer warranty just paid to replace everything inside the car, but the engine, you may not need to spend the extra money. Consider the condition of your car carefully and the likelihood that you will need costly repairs. It might be your money would be better spent sitting in the bank waiting to help on a down payment for another new car.

Extended warranties can prove to be lifesavers. They can also cost a lot for nothing. Before diving in to the purchase, consider the facts closely.