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How does an Extended Vehicle Warranty Work?

An extended vehicle warranty is like insurance – maybe you will need it, and maybe you will not. When you buy a new car, there is a built-in manufacturer’s warranty that protects the buyer from costly repairs to the vehicle. What happens when it expires? Dealerships and third party companies sell extended warranty packages that are service agreements between the consumer and the warranty company. They agree to pay the repairs covered by the contract.


They can be expensive and the language is often confusing, so understand what you are paying for before you sign on the dotted line.

Most auto repairs are caused by general wear and tear of the vehicle. However, many extended warranties do not cover these types of damages. Some dealerships will oversimplify and tell a customer that “everything” is covered, giving them a false sense of security. Before buying a contract, review what is covered and what is not. Make sure the extended vehicle warranty package you select includes mechanical breakdown and wear and tear coverage.

Vehicle owners may be responsible for paying a deductable to the repair shop while the warranty company covers the rest of the cost of the parts and labor. Some vehicle warranties have a zero dollar deductable, some have a $100 per-visit contract, and others are $100 per-repair. When deciding which the best car warranty is for you, consider how old the vehicle is and how many repairs you expect. The initial cost of the package reflects the deductable option you choose.

Auto repair warranties that are sold by a dealership often require the vehicle to use the dealership for repairs. This can cause problems for the owner of the car for many different reasons. The poor state of the economy has caused many car dealerships to close. Also, there may be an instance when a person cannot get their car to the dealership for a repair. It is best to choose vehicle warranties that offer many different licensed repair facilities.

There are many things to consider when picking an extended vehicle warranty. As long as buyers carefully read the contract, they will be able to select the package that is best for them and their cars. In order to make the most of your investment, and to avoid you car becoming a cash pit, find an appropriate extended warranty.

 
The Benefits Of An Extended Warranty

Purchasing an automobile is a large monetary investment that the vehicle owner expects to be worthwhile. However, there is no guarantee that the car will not experience any problems so the owner should consider some additional protection. An extended warranty provides coverage after the initial service contract has expired and there are several reasons to get one.


 The new or used car dealer usually sells initial auto warranties that cover the automobile for a specified period of time or certain number of miles. Consumers get these to provide them with peace of mind that should a component break or prove faulty, the out of pocket cost to repair it will not be outrageous. These contracts cover the major parts in the car such as transmission, engine, air conditioning unit, and integrated computer.

 When the standard vehicle warranty ends, an extended warranty begins. This additional service contract provides comprehensive, bumper-to-bumper coverage. Insurance companies back it, so there is no large commission added to the coverage. Therefore, the monthly payments are very low, even on the lowest deductible contracts. These contracts are insured so consumers can be confident that future claims will be paid.

 Filing a claim is easy and requires little work on the part of the vehicle owner. The licensed repair facility contacts the claims administrator to get repair authorization. Rather than being forced to pay the entire bill and then waiting to be reimbursed, vehicle owners need only pay the policy deductible. The car can be repaired immediately without the owner having to pay a lot of money.

 An extended warranty is more inexpensive when purchased through a source other than a dealer. It provides bumper-to-bumper coverage while requiring only a low deductible payment for repairs. Obtaining this type of coverage is a wise idea for any new or used vehicle owner.

 
What type of Coverage Do Extended Warranty Companies Offer?

Part of buying a new or used car is figuring out what kind of warranty policy, if any, is attached to the vehicle. Extended warranty companies offer service agreements that protect customers from costly repairs that the car may need one day. Owners of cars that are close to the end of their original manufacturer’s automotive warranty should consider purchasing one of these packages. They are available in varying degree of coverage: bumper to bumper, stated component, or powertrain.


The most comprehensive coverage available is a bumper to bumper warranty. Contrary to its name, it does not cover every single part on a vehicle. There are repairs that may not be included, so it is important to carefully read extended warranty companies’ policies to check for what exactly is covered. There are added benefits to this type of coverage like roadside assistance, wear and tear coverage, and electronic equipment coverage.

Some cars may not be eligible for a bumper to bumper warranty. Depending on the make, model, and year of a car, warranty companies can refuse this type of coverage. In this case, they offer stated component coverage. This is an extended automotive warranty that lists items covered by the contract and includes most major parts of a vehicle. It is recommended for vehicles between 50,000 and 100,000 miles.

The type of plan with the least coverage is basic powertrain. The engine, transmission, and drivetrain are covered by this package. When a mechanical problem occurs in one of these areas, the car can suffer costly damage. Buying a powertrain warranty will keep the car running at an affordable price. They usually extend the life of the vehicle, but this varies by manufacturer.

No matter which type of coverage you choose, or which extended warranty companies you consider, reading the policy carefully and understanding the contract are very important. The right policy will save car owners hundreds, if not thousands of dollars. Choosing the wrong plan is a careless mistake that can be even more costly.