How to Buy an Extended Warranty for a Car

If you thought buying the car was complicated, buying an extended warranty may seem like a nightmare. Remember that an extended warranty is simply an insurance policy against repairs on your car. Understand exactly what you are buying and get the contract that fits your needs and budget.

Difficulty:

Easy

Instructions

1. Remember that you don't have to buy an extended warranty when you buy your car. Many dealerships will allow you to buy anytime within the first year of ownership. Don't wait too long, though. Prices typically jump at 18,000 miles.

2. Ask for the policy booklet. If the salesman says it will come in the mail after you pay for it, find another company to deal with.

3. Find a policy that pays for repairs up front, not one that will reimburse you later.

4. Ask if there are limitations on who can repair your vehicle. If only the dealership may make repairs, you could find yourself on vacation and out of luck. Also find out if they will replace your parts with new--not refurbished--ones.

5. Make sure the warranty is for wear and tear--not mechanical breakdown--because some parts don't break, they just wear out.

6. Shop carefully for warranties for cars with lots of accessories, computer-operated systems and electronic goodies. These aren't always covered because they tend to be very expensive to replace or repair.

7. Look for restrictions on trailer towing. If you have a boat or a camper, you might not be covered if damage occurs while the trailer is hooked to your vehicle.

8. Watch the math. A place may offer you a 5-year/75,000-mile plan, but what they're really doing is tacking 2 years or 39,000 miles on your original warranty.

9. Avoid buying from the dealer. Save your money and buy your warranty directly from a company rated at least "A" by Standard & Poor's.

10. Read the deductible clause carefully. Make sure that the deductible applies to each incident, not each visit or repair. You should only have to pay the deductible once, even if you have to return to the shop three times to get it right. Better yet, consider a no-deductible warranty.

11. Make sure you know when your warranty is effective - it's not always immediate. A 30-day waiting period is not unusual.

12. Familiarize yourself with the warranty exclusions list. Some warranties don't cover cooling systems or when a car overheats.

Tips & Warnings

• It will be easier to sell your car with a transferable warranty.

• Above all, do your research. The time and effort will be worth it.

• Be aware that extended warranties don't cover headlights, taillights, trim and molding, tires, the battery, upholstery, paint, rotors or drums, shocks, glass, air bags or exhaust systems.

• Be prepared for high-pressure sales tactics. If the salesman says you'll be sorry if the car's electrical system goes out in 2 years, point out that maybe that car isn't for you if it's built so poorly.

• Ignore the sales brochure and ask to see the policy so you can see what is and isn't covered.