Classic Warranty
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Buy A Vehicle Extended Warranty, Yes or No?
I was amazed at the information or should I say advice an individual can find when debating whether or not to purchase an extended service policy for their new or used car. In most cases, the recommendation was "don't buy it". The advice often times lacked any concrete reasoning at all. Here are a couple of my favorites reasons why you shouldn't buy. "Any product worth buying should be backed by the manufacturer." Tell that to your mechanic when your car won't shift out of gear and it's outside the factory warranty. He'll nod in agreement as he hands you the bill. Or another classic… "Put the money you would have paid for the coverage aside to gain interest instead of handing it over to the dealer and pay as you need it." This advice must have come from Warren Buffet. Most people are not interested or patient enough for this type of financial savvy. Now, don't get me wrong, I'm not saying you should flop over and say yes to the service plan just because it's offered. But I'm betting that the guy who tells you not to buy one won't be shelling out the money for that unexpected repair quite as willingly as he shells out advice either.
I want to give you a few things to consider the next time you are offered a service plan for a used car. I believe its reasonable and logical advice that will help make your decision easier and give you the assurance that you're making the right choice. For starters lets talk about when you don't need to buy the extended plan. When you purchase a new vehicle it comes with Warranty provided by the manufacturer for a set amount of time and miles and will expire when one or the other is reached. For example, 3 years or 36,000 miles of factory Bumper to Bumper Warranty. If you know you won't be outside the factory warranty during the time you own the vehicle, you don't need to purchase additional coverage.
When a vehicle has used up all or most of the Factory Warranty, purchasing additional coverage needs to be considered. An important factor in your decision making process is to determine if the plan is reliable. The manufacturers service plans are usually a safe bet. They are easy to use and offer straightforward coverage honored at auto dealer service departments without question. In addition to manufacturer backed service policies there are also third party providers. When looking at these plans get as much information as you can. How long have they been in business? Do they pay the repair facility directly? Where is the policy accepted? Ask questions and do your research, not all service policies are created equal.
The second important factor when considering the extended service policy is cost. You don't want to overpay, but just because a company is making money on a sale doesn't mean they are ripping you off. Yes, providers are making money or else they wouldn't be in business, but they also provide a service. Repairs can be expensive and a surprise repair can absolutely crush an individual who isn't financially ready to deal with it. Service policies allow you to budget the cost of these unexpected repairs into your monthly car payment or spread the cost over time with a payment plan offered by the provider. Often times they will finance it for a year or two at 0% interest. To demonize something because there is a charge for it is ridiculous. Service policies serve a purpose, they take care of unexpected repairs that can blind side you and lay claim to your next paycheck or hard earned savings. Most include roadside assistance which provide towing and a loaner, the last things you want to worry about when your vehicle is sidelined.
You will know in the end if an extended service plan paid off, which it often does. But even if it doesn't, at least you had an idea at the point of purchase what repairs were costing you. Service plan providers sell you a policy that will cover your vehicle in the event you run into repair troubles. They charge you a fee to take the risk for you. Sometimes they win sometimes you win. Knowing the cost of repairs ahead of time can be very comforting. There is nothing worse than an unexpected repair bill.
Now, pay attention! I'm ready to make a Supreme Court decision on whether or not to purchase the extended service policy. Here goes… If it makes sense to you, do it. When does it make sense? When you can purchase coverage that puts your mind at ease and do it at a reasonable price. Aren't most purchases a result of the benefits outweighing the cost? A service policy is no different. If you can purchase additional coverage for the extra years and miles you'll be driving, and you can do it affordably, why wouldn't you? When unexpected repairs are needed, it's a good feeling to know you've already budgeted for them. So… pick up your free loaner car and rest easy.
About the Author
I manage a company that is becoming a primary channel for automotive leads generated for used cars online. With a solid foundation for growth, AIM will simultaneously build its current brands while continuing to grow through launching and managing other properties in the auto classifieds space. Check out AIM for more information