Should You Get an Added or Extended Warranty on Your Car?

Posted on: 6 October 2016

When you buy a new or used car from a dealership, you may be offered an added or extended warranty. While you don't want to pay for anything you may not actually need when it comes to your car, this doesn't mean that an additional warranty is a waste of money. Note a few factors to consider that can help you determine if you should invest in that added or extended warranty for any car.

Understand what it covers

It's good to understand what a warranty covers and how long those parts are expected to last; for example, a car's drive train refers to all the parts that deliver power to the wheels, other than the engine itself. This can include the steering column, clutch and transmission. The power train refers to the engine along with the drive train parts.

If you're buying a car model that is known to have a rugged engine that lasts for hundreds of thousands of miles or kilometers, you may not need the extended power train warranty. However, if you haul heavy loads with the vehicle or consistently drive in stop-and-go traffic, the car's clutch and transmission will suffer some extra wear and tear; in that case, it may be good to get an extended warranty on at least the drive train.

Expected ownership of the car

How long do you expect to own the car that you're buying? If you want to drive it as long as possible and don't have any concrete plans for eventually selling, investing in an extended warranty can mean avoiding some future repair bills. If you think you might sell the car in a few years, note if the warranty will transfer to a new owner. If so, this might actually increase its resale value, but if not, it may not be something you use within the few short years you own the car.

Limitations and exclusions

If you get a particular warranty, will you need to only use certain brand name parts or take your car to certain shops for repairs? This is a limitation for some warranties, and it may include repairs for parts that aren't even covered by the warranty itself. Note other exclusions, such as the warranty being voided if you haul or tow anything over the vehicle's towing capacity, take the vehicle off-roading, or even modify the vehicle in any way. You don't want to buy a warranty and then find that your repair costs are not going to be reimbursed because you were towing a heavy caravan or customised the car's exhaust.