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Extended Auto Warranties - Make The Best Choice

Print View | Html View Written by: Rand Stuck
Total views: 30 | Word Count: 1797 | Date: Thu, 20 Aug 2009 | 0 comments

You are on vacation having a great time, far from the crowded city, and at that moment if your vehicle starts to make a terrible grinding clatter or sputters to a stop, it must be a hellish experience. Having a mobile phone, you may call for the nearest car repair service. If you find out that, some expensive parts have broken and that, you are outside the mileage and time limit of the warranty it will be a heavy blow for you.

If you have an extended warranty contract, it will help you a lot. If your vehicle has broken, you must face a situational headache but this contract brings peace to your mind that all the costs are under coverage. In most of the cases, it is not the vehicle break-down that gets to you but their huge repair costs that will stress you out.. The brand is immaterial as the saying goes in the auto industry that everything eventually breaks, so it makes more sense to be prepared for it.

Extended warranties generally can and do save you money in the long run. However, if you lease a vehicle and plan to turn it in at the end of the lease period, the extra cost is probably the best idea. But if you bought your vehicle, you may want to look at a warranty based on how long you plan to keep the car. While extended warranties may seem costly at the time of buying, they typically recover their own costs for long-term owners, and some actually have a buy-back clause that makes them a "can't lose" investment.

Cars are like white elephants. It was an expensive investment in the first place. Added to that, they are very expensive to maintain. The repair costs of the automobile, most often than not leave you high and dry. This can be averted by purchasing an extended warranty for the vehicle. For example, an automatic transmission failure can pay itself under the extended warranty. Transmission repairs can cost you $2000 or more in repair since they are close to the cost of re-manufactured unit. Paying $700 to fix an air-conditioning failure is a costly affair. Even a $100 deductible is better than paying the entire bill out of your own pocket.

Generally, at the time of purchasing a vehicle one should purchase the extended warranty contract. However, some contracts may be bought later without giving any penalty charges. When you are about to take the signature for your DMV and other finance papers from F&I(Finance & Insurance), perhaps you will be asked for purchasing an extended auto warranty for your vehicle. If you are interested then you will be asked for the choice of either the brand of manufacturer or a contract of an aftermarket brand.

Some dealers may offer only one brand of contract, which may be either the manufacturer's brand or an aftermarket brand. If they do not offer the manufacturer's brand, you should specifically ask about it to see if they have it. I remember going to a dealer with a friend who was buying a new Ford SVT Contour and was offered an extended warranty for the vehicle " an aftermarket brand of contract. He asked about the Ford Extended Service Plan (ESP) brand of contract but the finance representative told us they sold only the aftermarket brand and had no information about a manufacturer-backed warranty.

My friend claimed to purchase only a Ford warranty based on my bold advice. Further, after a profound investigation the F&I person was able to give the required information. My friend decided to purchase the contract with its coverage considering all the cost of different levels of coverage and accumulating the mileage and his planned time of ownership. The F&I person admitted that it was the first time he was selling an extended warranty of manufacturers brand. He had to check and follow the Ford ESP policy book while filling out the required papers properly. Never accept no for an answer. If the name of a vehicle manufacturer company is on the structure, they must sell you that manufacturers brand of contract.

A dealership may claim to sell only one brand if they make more money on the aftermarket brand and/or that brand has a tie in with the dealer. Many dealers have their own brand of contract, in which they obviously have a monetary stake, with a fancy name to make it sound appealing. And it makes business sense for them to try to sell you only that brand and no other. Also remember that the F&I person's commission may be connected to the brand of contract that the dealer is trying to sell you. Therefore, you should carefully explore all of your options based on what you want rather than letting the dealer talk you into buying excessive warranty coverage in order to earn a higher commission.

An important aspect to look out for no matter which policy you decide to buy is the ease of use if and when you do have to take recourse to the plan. If you buy the manufacturer's warranty plan you will be able to use it at any authorized dealer nationwide. If you choose to buy an aftermarket plan you may be saddled with the task of taking it back to the dealer where you bought the plan.

There are a number of questions you need to ask before purchasing any plan: Is it easy to use? Does it require you to foot the bill and later get reimbursed? Does a direct pay out exist between the company and the repair facility so you don't have to pay out of your own pocket at the time of the repair? Is the plan easy to use at the repair facility? There can be quite a delay in getting your car repaired if you are often put on hold on the phone while seeking authorization. Does the auto warranty company send a representative to inspect the vehicle? This can cause major delay in the entire process of getting the car repaired on time.

That is why manufacturer-backed extended auto warranties are the easiest to deal with for a repair facility, as they are already on the payment program. With these plans you never need to pay up front on a covered repair, except for your deductible. Repairs are almost immediately approved, except in very rare cases where an inspection is deemed necessary, and the entire process is much smoother. Naturally, such warranties also mean a lower financial load and quicker approvals, to say nothing of quicker repairs.

Once you choose the auto warranty you would like, you'll usually find that you are offered different levels of coverage within the same brand of contract. Some of those levels are for parts coverage, some are time and/or mileage levels and some are for the amount of your deductible. But first, systematically evaluate your estimated requirements for time and mileage, and base your decision on this factor. Some of you may put a lot of miles on a vehicle in a short time, so a high mileage plan (rather than an extended time plan) may be your most workable option, money wise. Again, people who plan to keep their vehicle for a long time without driving it over long distances may want a longer time period plan with lower mileage coverage.

After deciding on your time and mileage, consider what parts coverage you would need, if the option is available. You may be offered levels of coverage that range from silver and gold to platinum or, for example, a powertrain plan that covers only the engine, transmission, and differential. The more extensive the list of parts that the warranty covers, however, the more it costs you. Therefore, make sure you get the best value by purchasing the coverage plan you need and can afford.

Finally, consider what you would like your deductible to be, again, if given the choice. You may be offered different levels for your deductible such as $0, $50, or $100, with little additional cost to upgrade from a $50 to a $0 deductible. If you have a difference of $200 between the $0 and $50 deductible levels, bear in mind that using the plan four times would pay for the difference in cost.

One point you should always make clear is whether the deductible charged is per visit or per repair. Per visit means one deductible for any number of repairs on that particular visit. And per repair is self-explanatory. So if you come in with five items covered under the warranty then you need to pay five deductibles.

One or more standard features may be included that make the contract more cost-effective. Among these are roadside assistance, covering items such as a tow service or, in case of emergencies, hotel bills, food and other unanticipated expenses when you are away from home. Another attraction could be a buy-back clause that allows you to get part or all of your money back if you do not use the contract. The buy-back clause makes getting a warranty financially more suitable for many people who may be in two minds about the purchase. Make sure also that the policy is transferable, because this is an excellent selling point if you decide to sell the vehicle before the extended warranty policy lapses.

Price is am important deciding factor in this whole process. In most states, the cost of auto warranty contract can be added to the cost of the vehicle while applying for a vehicle loan thereby spreading the warranty cost too over the length of the loan period. The periodical payment in this way helps in moving up to the next level of coverage with ease.

Some dealers mark up their costs over the recommended retail of extended warranty plan. You will never come to know whether the dealer is taking high price or retail price for the extended warranty. It is better to compare first with another dealer. Just like the flexible price of vehicles, you must negotiate the warranty plans cost too. After all, you are a reader of Edmunds.com.

Remember that purchasing a vehicle is a big investment for life. An extended warranty plan can give you the peace of mind that you need. A short term spending gives you greater value and sanity in the long term. It is quite an unpleasant experience having to someone for help and patiently wait for them to tow your car to the repair shop, especially during your well deserved break.

About the Author

Rand Stuck is a certified BMW technician with over 13 years experience servicing BMWs and currently manages the BMW parts department for an online parts retailer. You can find additional Extended Warranty information at AutoWerks