Extended warranties aren't the same as an original factory warranty. Warranties typically follow the vehicle, not the driver, however, this may not be the case with a service contract.
Extended warranties aren't the same as an original factory warranty. Warranties typically follow the vehicle, not the driver, however, this may not be the case with a service contract.
An extended warranty typically doesn't follow the vehicle the way a factory warranty does, nor does it stick with you after you make a trade.
An extended warranty is different from an original warranty and is generally found on used vehicles. They're a separate purchase that you can make at a dealership, through a third party, or from your insurance provider. Extended warranties are also known as service contracts, and you need to read the fine print carefully before you sign on the dotted line.
A factory warranty is an agreement that the manufacturer is going to cover the costs of certain repairs. The specifics vary. However, original manufacturer warranties typically come as either bumper-to-bumper coverage or powertrain coverage and follow the vehicle for a certain number of miles or amount of time.
When you're purchasing a used car with an extended warranty, it can give you peace of mind and could save you money in the long run.
Knowing that you may not have to pay out of pocket for things that go mechanically wrong with your vehicle can be worth the extra cost – paid as a separate monthly premium, or rolled into your auto loan contract.
All extended warranties have contract specifics, some allow for you to get unexpected repairs done at a number of locations, while others may require you to use a certain group of repair shops, or return to the dealership service center for repairs.
Some third-party service contracts may even require you to pay for the repairs yourself, and send you a reimbursement later. Other warranties cover things to a certain extent after you pay a deductible for the rest.
If you're considering financing a used car, or have recently purchased one, you may be wondering if an extended warranty is worth it for your vehicle. Before you jump into the fray and purchase a service contract, be sure to ask yourself the following questions:
Now that you know an extended warranty isn't something you have to fret over when trading in your vehicle, you can settle into the knowledge that peace of mind can be purchased for a new-to-you-car at any time, in most cases.
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Senior Automotive Financing Editor
Meghan has been writing professionally for over 25 years. She is expertly versed in automotive special financing and pricing analysis, having published hundreds of articles on Auto Credit Express and its sister sites, CarsDirect, and The Car Connection. Read more
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