If you buy a brand new car from your local dealership, you will most likely receive a free warranty covering you from bumper to bumper. But what happens when this warranty runs out? And what if you are buying a used car?
If you find yourself sitting in a broken car after the warranty period, you will be required to pay for all the necessary repairs out of pocket, unless you buy an extended auto warranty. An extended warranty can cover both small and large repairs. Each and every plan is different, and the services and parts that are covered by the plan are different as well.
Things to Consider
According to Consumer Reports, nearly 50% of all car buyers that decide to purchase an extended warranty will actually file a claim for car repairs while covered by their extended warranty. In all, this means that the purchase of an auto warranty can be a gamble.
If you get a major repair done while enrolled in an extended auto warranty, the warranty could pay for itself. Common repairs such as a head gasket could cost upwards of $1,000 or more. However, people can view auto warranties (often referred to as service contracts) differently. For instance, some individuals want to have a worry-free ownership experience, and the peace of mind is worth the cost.
Buying an extended warranty is a matter of personal preference. Ask yourself the following questions below before choosing to purchase an auto warranty.
How Long Will You Keep the Car?
If you are a frequent car buyer and tend to purchase a new car every 3-5 years, purchasing an extended auto warranty may not necessary. Do you have an emergency fund you can dip into to pay for costly repairs such as an engine swap or transmission issue? If so, you may not need an auto warranty. But if you are a frequent car buyer, having to dip into your funds to pay for a costly repair could set you back on your purchase date.
Is Your Car Reliable?
There is no question that some car makers and brands are much more reliable than others. All vehicles will require work and repairs at some point or another, but some will need much more work to maintain than others. Before you purchase a new or used car, do some research on reliability ratings and see what other owners have said.
Do You Drive a Lot?
If you are used to putting on 20,000+ per year on your car due to a job or extra long commute, those miles will begin to take a toll on your vehicle. If you plan on driving your car and adding lots of miles, an extended warranty may be for you.
If you are in the market for a reliable car or are looking to replace your current car with something more reliable, you may be concerned about your credit score and its effect on your payments. CrediReady offers one of the largest databases that connects dealerships, lenders, and buyers in all credit situations. Take a few moments to fill out our free and confidential loan search form online and we will match you with a dealership in your local area that can meet your auto financing needs.