Extended Warranties–Should You Buy One Or Not?

There's a lot of common tips that people spread about looking at cars for sale. For example, you might have heard that you should never discuss the monthly payment on your new car until you've agreed on a price. You've also probably heard that you should never take the dealer's first offer on your trade-in. These tips are often founded in reality, but they tend to lose their value in many situations.

You also might have heard that you should never, under any circumstances, purchase an extended warranty. Financial experts state that these add-on products are almost always a way to increase dealer profit and have little value to the consumer. However, this is a generalization that isn't helpful at all. There are a number of circumstances where an extended warranty is a great value. 

What Are Your Car Buying Habits?

Some people love the idea of paying off their automobile and driving it, payment free, until it can't run anymore. On the other hand, some people love the thrill of owning a new car more than they enjoy a frugal lifestyle. They tend to trade in their car every couple of years.

If you're the type who likes shiny paint and new car smell, you probably don't want to opt for the warranty. After all, your car will likely be traded before the factory warranty expires. If you're looking to drive your car for a decade, an extended warranty starts to make a whole lot of sense.

What Car Are You Buying?

Certain models of cars have a history of being rock-solid investments. Other cars are known for their likelihood of repair costs. A lot of times, these reputations have to do with add ons such as electrical options and upgrades. However, some cars and model years simply tend to break down more than others.

Take a look at the various resources available to car buyers. Does your make and model historically need regular repairs? If so, consider the warranty. This is doubly so if you opt for the power windows, tailgates, and other electric options that tend to fail and create costly trips to the shop.

Who Makes Good On The Warranty?

Third-party warranties are backed by a variety of companies. Some of these companies are extremely reputable and provide a great service to auto buyers. Unfortunately, some companies are the exact opposite of this.

To avoid any issues, opt for a warranty that is backed by the auto manufacturer. These usually allow you to use the coverage at any dealership across the country. Other, more specific warranties might require service at an individual dealership--making it more difficult to recover value from the warranty.

The most important thing to remember about extended warranties is that you're buying peace of mind. If you think you will have that without a warranty, don't be afraid to say no. On the other hand, if you feel like the warranty will make you feel better about the purchase, don't hesitate to make the purchase. If a crisis pops up, you'll be glad that you did