When buying a new vehicle, a warranty is typically included. Deciding to buy an extended car warranty after your initial 3-year or 4-year vehicle warranty has ended can be a hard decision to make. An extended warranty essentially provides you with the same contract as a standard warranty. The coverage typically includes repairs and maintenance for potential electrical and mechanical failure for car parts or components.
You might be hesitant to buy the extended warranty because you do not completely understand the use.
Here are three pros and cons of getting an extended warranty for your vehicle.
Pro: Reduced Repair Costs
An extended warranty typically covers scheduled maintenance, repairs, and replacement of damaged car parts due to wear-and-tear or component failure. However, warranties offered by automakers, like the BMW extended warranty and car dealerships, do not cover all damages or breakdowns that your car might experience. Therefore, the contract will not eliminate the need for out-of-pocket costs, but it will significantly reduce them.
Pro: Car Value Preservation
Unlike real estate or stocks, cars typically depreciate in value over time rather than increase it. What’s more, some vehicles depreciate more than others. So, if you plan to sell soon, chances are you will have to sell lower than the purchase price. The scheduled maintenance and repairs covered in an extended warranty will preserve the value of your car in the long run.
While the original vehicle warranty offered by your automaker or dealership is not customizable, an extended vehicle warranty is.
An extended vehicle warranty is more flexible and allows you to add and remove items to create a policy that’s most suitable. Customization of your policy may further decrease the total costs of repairs and maintenance of your car.
Con: Scope Of Coverage
As mentioned above, automaker and car dealership warranties typically do not cover all costs you may incur as a car owner. Costs like tire punctures, vehicle towing, and damages caused by third parties, such as in a collision or an attempted break-in into your car, are items that typically fall outside of the scope of your cover.
Con: Limited Access To Service Providers
In certain instances, automakers and car dealerships allow car owners to only service their vehicles at their workshops or services providers, such as mechanics, listed with them. This limitation has the potential to leave you stranded if you happen to be geographically far from the nearest accredited service provider.
Con: You May Never Use The Warranty
Like health insurance, an extended warranty is only used when the need arises. Therefore, if your car never experiences any electrical or mechanical breakdown during your vehicle ownership, you may end up wasting money.
To avoid paying for a service you have no use of, ensure that your warranty has a set of scheduled services where technicians will conduct regular checkups with the need arising.
An extended vehicle warranty can be an excellent investment if you know what you seek. Hence it is suggested that you do your due diligence by weighing your options and reconciling your wants to your needs