Are Extended Warranties Worthwhile?

Most major purchases include a warranty to protect you from the cost of repair or replacement of an item due to failure. For example, purchasing an extended warranty for your vehicle protects you from costly repairs for certain items in your vehicle after the original warranty expires.

Function

Extended warranties cover wear and tear and mechanical breakdown for a specified period of time or mileage. Some warranties require that you maintain your vehicle according to the service schedule and have the records to show it has been completed.

Considerations

Consumer Reports recommends that you wait until six months before your regular car warranty expires before you start shopping for an extended warranty. At this point you will have a better idea if you want to keep the car or if reliability of the vehicle warrants an extended warranty.

Warning

When you purchase a vehicle, the salesmen may pitch an extended warranty that last up to eight years or 100,000 miles, when it actually starts after the new car factory warranty expires. In reality, it lasts five years or 64,000 miles, if the factory warranty lasted for three years or 36,000 miles.

References

• Auto Education: Extended Auto Warranty Tips