Covering your car is smart, but is the extended warranty worth it?

Whenever you buy a new car, one of the pitches that gets made before you drive off the lot is that you can extend your warranty past the factory one just by paying a small sum. It’s a fairly compelling argument, as it means you’ll get more coverage for your car. But before you put down cash for a longer warranty, you should consider how likely you are to actually use it, and how you’re allowed to use it.

What Does It Cover?

It’s easy for shoppers to forget that a warranty is a legal document. In fact, a warranty is technically a contract entered into between the consumer and the automaker or dealership that certain conditions will be met. If those conditions aren’t met, then the party providing the warranty has certain legal obligations.

But like any contract, it only covers exactly what’s written on the page, no matter what the salesman might tell you. When shopping, don’t forget that extended warranties are written by the company providing you the vehicle, and they’re unlikely to cover anything that might reasonably be expected to cost them money over the life of the warranty. So know exactly what this contract you’re buying gets you, as it may not be worth it.

Will You Use It?

Extended warranties vary widely depending on who issues them. Some will cover common, basic repairs completely on a new car, while others will cover little more than completely unlikely scenarios you’d have to beat some long odds to even see on the road, let alone experience. That makes it important to figure out whether your warranty will ever kick in; Consumer Reports found that after putting those who used it against those who didn’t, the value of an extended warranty was $0.

An extended warranty might not cover everything.

It really depends on the car you’re buying. While modern vehicles have some of the best quality control of any product in the world, each individual make and model of vehicle will have quirks that make it more likely to need specific kinds of repairs over others in the course of its lifetime. Some of these problems may have already turned up in your research of the car you’re buying, and with new cars especially it’s never entirely certain what’s going to be problematic.

You should also look at what the warranty covers generally. If there are common issues that you might reasonably expect to run into over the course of the warranty, then it might be worth picking up. Still, don’t forget the biggest factor; you can get the same coverage elsewhere and for less.

What’s Your Insurance?

No matter which state you’re in, you’re likely expected by the state government to sign up for car insurance. And while you shop for insurance, if you’re considering an extended warranty, it’s likely worth asking what kind of insurance you can get to cover the same repairs an extended warranty might. In many cases, the insurance will likely be more comprehensive, roughly at the same price depending on the car, and most importantly, you won’t be on the hook for the full term if you decide you don’t need it. Warranties can offer peace of mind, but smart shopping offers both peace of mind and a full wallet.

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