Last Updated on September 16, 2022 by John Robinson
Extended car warranties can be a bit complicated. They’re expensive, and buying them may make you feel as if you’re wasting money. According to a recent Consumer Reports survey, 45% of car owners who purchase an extended warranty use it. So, when do you need an extended warranty? There are times that you might not realize you’re driving into a financial ditch until it’s too late. Here are six scenarios when buying the best extended car warranty might come in handy.
Times You Might Need An Extended Warranty
#1. You Bought a Pre-owned Vehicle
While new cars come with a manufacturer’s warranty, that warranty doesn’t last. So, when you’re buying a used car that is three to five years old, it’s quite possible the manufacturer’s warranty has already expired. In that case, buying an extended warranty is the best option.
When you buy a used vehicle, it’s never certain how much wear and tear the previous owner put on your car. An extended warranty on a used car can keep you from taking a huge financial loss if, for instance, the engine dies.
#2. You Plan on Keeping Your Car Indefinitely
It’s common to trade in a car after three or five years, which is typically when a manufacturer’s warranty expires. If you’re planning on keeping your car for the long haul, it’s smart to purchase an extended warranty before your car is out of warranty.
#3. You Drive a Lot of Miles Each Year
If you drive over 15,000 miles a year, getting an extended car warranty would make sense. Warranty expiration dates are based on years and mileage. Drivers who put a lot of miles on their cars each year will likely move the warranty’s expiration date forward sooner.
#4. You Want to Sell Your Car
If you plan on selling a car that you’ve owned for more than five years, buying an extended warranty can increase the resale value of the vehicle. Warranties are transferable, so when you sell your car, you can transfer the warranty. You might also think about adding a warranty to your car when you sell it.
#5. You’re Worried About Future Repair Costs
There are times when it’s hard to predict future car repairs. If you’re worried about the expense of your vehicle’s motor and transmission, a longer guarantee may put your mind at ease. Extended warranties cover a variety of parts, including the engine and transmission. So, if you’re concerned about those pricey repairs, buying an extended warranty is a wise move.
#6. You Want Peace of Mind
If you’d rather spend money on something more pleasurable than car repairs, then adding an extended warranty to your vehicle purchase is a smart choice. Most extended warranties are available for between three and seven years and are relatively affordable. An extended warranty gives you peace of mind because it covers repairs.
When to Pass on An Extended Warranty?
There are some situations where the answer is no. Here are six situations when it’s best not to buy an extended warranty:
1. You’re buying a new car – When you buy a brand-new car, the manufacturer’s warranty should last at least three years. So, buying an extended warranty on a new car is unnecessary.
2. The warranty is too expensive – Many people avoid purchasing an extended warranty because it’s so expensive. If the warranty is too expensive, then there’s no reason to buy it.
3. You have a reliable car – It’s pointless to buy an extended warranty for a car that’s well-maintained, and that’s less than five years old. If you’re more likely to sell your car before the warranty expires, then it doesn’t make sense to add an extended warranty.
4. You have a lot of money saved for repairs – If you’d rather set aside the premium for an extended warranty in a savings account, then there’s no reason to buy it.
5. You don’t drive much each year – Extended warranties are available in terms of both mileage and months. If you drive less than 15,000 miles a year, add fewer months to the warranty to keep costs down.
6. You only need basic coverage – Many extended car warranties include options for all kinds of coverage. If you don’t need everything, leave out what you don’t need.
Before you make your decision, it’s smart to consider all of the benefits and drawbacks. An extended warranty is a big decision. You should weigh the pros and cons before making your final choice.