Should You Buy an Extended Warranty for Your Vehicle?

They call it different names: extended warranty, service plan protection, vehicle protection plans maintenance or service agreement, mechanical breakdown insurance, or even a service contract. But whatever the case, their purpose here is to do one thing: to extend your car's warranty.

Of course you might think we're just repeating ourselves here, since the term itself is self-explanatory. But no, we're not. Truth is, it's actually more like a health insurance when it all boils down to it. Why?  Because you're taking a risk here by paying quite a huge sum of money here--and you don't know if something will do happen to your vehicle.

Should you buy an extended warranty for your new car?

Extended warranties are at their best when you plan to keep your new car for a very long time. Let's face it: your car's warranty can only last a few years--3 to 5 years at most. And once it expires, your vehicle is vulnerable once again. Extending your warranty to a couple of years more ensures that you're protected in case your car suddenly runs into an accident or develops a problem.

Note, however, that many new cars today have good safety features that can withstand a lot of abuse these days. If that's the case, then there's a possibility you won't need a lot of costly repairs.  However, if your car has a shady reputation, and/or is as unreliable as our plumber from hell, then extended warranties can be good for you.

Should you buy an extended warranty for your used vehicles?

Yes, if your used car is prone to breakdowns. Here's the advantage of used cars: in most cases, there already have been a lot of past reviews about them that you can use in your research. Knowing which used car can take a lot more maintenance as they grow old can make you either decide to a) ditch them; or b) still buy them but get an extended warranty as safety net in case something happens.

So, to buy or not to buy?

Pros

There are three reasons why extended warranties are attractive to many:

1. They cover the expensive repairs.

Most modern cars today are complex machineries. And their components are not only expensive to repair--but also costly to replace. Extended warranties will give you that peace of mind, especially if you intend to keep your vehicle "till death do us part."

2. They are flexible.

You can actually customize your warranty depending on what you and your vehicle really needs. For instance, if you like to drive on rough terrains all the time, then you can lengthen your warranty on your car's suspension, bumper, chassis, and power train. The rest of the parts, however, can only fall under a short warranty period.

3. They can give you peace of mind.

If you're the type who likes to worry a lot--or is obsessive about your vehicle--then knowing it's protected can (hopefully) make you sleep better at night.

Cons

In case you do decide that you need one, allow us to give you a couple of warnings:

1. They can be costly in the long run.

Extended warranty prices can be negotiated, but whatever the case, they're still an expense that you need to pay for a considerable time. Consider if it's worth that financial sacrifice.

2. Not everything's covered.

This means it's important to read your contract carefully. Look for 'exclusion lists' that will give in full detail which parts or services will repaired or covered by the warranty.

3. Be careful of third-party providers.

We're not saying everyone's bogus here, but third-party warranty providers are not often backed by the car manufacturer. So not only will their facilities be limited, but in some cases, the warranty becomes void if you move to a different location. So the lesson here is to make sure you're only getting from reputable providers--and don't forget to ask questions before you sign the deal.

4. You might not even use your warranty at all.

If you're O.C with your car and are extremely careful with it, then you might not even need to use your extended warranty in the first place. The same goes if you have emergency funds for car maintenance alone plus other additional savings hidden somewhere. Why need that when you have money stashed already, right?

Final Word

Getting an extended warranty really depends on what you need--and what situation you're in. In the end, what really matters is how much value you place in your vehicle--and how much you're willing to spend for it. Whatever the case, your decision should give you a much better sleep at night.