13 Tips to Purchase Wisely the Best Extended Car Warranty
It is time to figure out how much is the best-extended car warranty cost and how to save money. The most expensive aftermarket product marketed to automobile buyers is an extended warranty for your vehicle. We will be providing you with advice and information on how to buy extended vehicle warranties for over two decades.
There are various elements that combine to influence the cost of an extended automobile warranty; some of these costs are under your control, while others are fixed and out of your hands. We’ll teach you how to take advantage of the elements that you do have control over to ensure that you get the best deal on an extended warranty.
1. How much does an extended auto warranty cost?
Extended warranty sales are frequently marred by false promises and, in some cases, plain deception on the side of vehicle sellers. However, we can help you through the murky seas of extended warranty purchasing so that when you buy one, you can be comfortable that you got the right product for your car at the best price.
Extended car warranties are referred to as vehicle service contracts under federal law because the warranty administrator promises to pay for certain covered repairs to your vehicle if you have a failure covered by their vehicle service contract.
Some people believe warranties are pointless or that claims are never paid. Over the years, our consumer advocate team has assisted thousands of customers, and we’ve seen many car buyers become their own worst enemies by choosing the wrong amount of extended auto warranty for their vehicle.
Then, when their submitted claim is refused, these same uninformed customers who refuse to accept they made a mistake become enraged and begin advising others against purchasing a warranty.
2. The costs you’ll have to pay if you buy a car.
You want to get a Toyota extended warranty for your Camry, but you’re not sure how much you should spend or whether you’ll be taken advantage of at the dealership.
While looking for the best-extended auto warranty for your Toyota, keep in mind that warranties are one of the most overpriced alternatives provided by car dealers, who provide no value to you and only operate as middlemen between you and the warranty company. Vehicle dealers sometimes charge $3,000 or more for a watered-down extended warranty package that would be worth about $1,500 if purchased straight from a third-party car warranty business.
Stay away from danger and toward reliable extended car warranty businesses so that you don’t overpay for your extended auto warranty at the dealership. You’ll be astounded at the outrageous price gouging that vehicle dealers use to pad their profit margins.
Do you want proof of how outrageously high overcharging is? Simply read our Guide to Closing the Deal in the office to learn how much vehicle dealers gouge you for all the aftermarket extras, such as $300 for Scotchgard fabric protection, which is available for $5 at Walmart.
They also want to charge you $400 for VIN# engraving on the windows, which is something vehicle dealers like to do, but the 15-minute install kit purchased online just costs $50 for 5 windows.
We’ve been reporting for years on how vehicle dealers have come up with several new methods to charge you for multiple pointless fees, in addition to overcharging you for extended car warranties. Simply read our New Car Dealer Fees Glossary to see all of the numerous techniques and contrived costs car salespeople have up their sleeves to overcharge you for fees that reflect no product, no added intrinsic value, and provide you with nothing in return.
“Oh, the fees you will pay,” Dr. Seuss could have called a book about this subject if he had written one.
3. How are extended car warranty costs calculated?
Car warranty firms, like insurance companies, hire actuaries to calculate the risk of offering you a Jeep extended warranty and how much they should charge so that they can still make a profit even if just a few claims are filed. Before you go out and get that Chevy extended warranty for your car, consider the following variables that influence the price of your extended vehicle warranty:
- You are purchasing an extended auto warranty from a reliable company.
- Your vehicle is brand new and still covered by the manufacturer’s warranty.
- Extended auto warranty providers typically raise their prices every year.
- Your vehicle is a used vehicle that is no longer covered by the manufacturer’s warranty.
- Your Mercedes AMG, Land Rover, or Porsche is exceedingly expensive to fix.
- Your automobile model has a history of poor dependability and frequent maintenance.
- You are purchasing an extended warranty for your new automobile from a car dealer intermediary.
- The types of insurance policies you buy
- Whether or if your extended warranty comes with a deductible
You must demonstrate patience and endurance when purchasing a car warranty in order to use the scenarios above that you do have control over to ensure that you pay the least amount of money when purchasing the Audi extended warranty. To help you save money, we’ve analyzed each of the nine possibilities above.
4. Purchasing your extended vehicle warranty from a trustworthy extended car warranty company.
Because vehicle dealerships charge huge markups for extended warranties, this is one area where you don’t have much influence over the pricing. As a result, dealing directly with reliable third-party extended auto warranty companies is your best bet for saving money.
CARCHEX, an online direct-to-consumer warranty company, sells extended vehicle warranties to consumers at far lower costs than automobile dealers. Many of the same commissioned warranties provided by car dealers and exclusively available through dealer networks are also marketed directly to customers through another part of the same extended auto warranty provider and rebranded under a different name.
To put it another way, some warranty businesses have retail and consumer divisions that sell and manage the same product. The administrator of both warranties programs is frequently the same business, and both auto dealers and car buyers are ignorant.
The best-extended auto warranty to buy is one that includes exclusionary coverage and, most importantly, cover for wear and tear. They don’t play games with what breakdowns are covered and what isn’t on your automobile because of this restrictive coverage.
To put it another way, some warranty businesses have retail and consumer divisions that sell and manage the same product. The administrator of both warranties programs is frequently the same business, and both auto dealers and car buyers are ignorant.
The best-extended auto warranty to buy is one that includes exclusionary coverage and, most importantly, cover for wear and tear. They don’t play games with what breakdowns are covered and what isn’t on your automobile because of this restrictive coverage.
We cannot emphasize how important it is to ensure that your warranty includes the above-mentioned wear and tear coverage; otherwise, even if you had an exclusionary coverage package, you would only have around half the coverage you require. One of the most common concerns we’ve received from customers over the years is that the administrator labels most of their claims as wear and tear, resulting in the warranty provider rejecting their claim submission.
Many auto salesmen will try to sell you on their extended warranty’s bumper to bumper coverage, but many of them will misunderstand and abuse this concept to make you believe you have magical umbrella coverage that covers every element of your vehicle. However, after submitting a claim, you learn the hard way that many of your claims were refused because they were on a list of exclusions, despite the fact that you were promised you had bumper-to-bumper coverage.
Always verify the contract before you buy; auto dealers prefer not to show you the true contract for the warranty, for which they want you to pay a lot of money. You’re more likely to answer no if you ask a lot of questions.
It is your right to see the contract, and if they offer you a fake reason why you can’t read it right now, walk out. You will not be buying a car from that dealer today.
They prefer to deceive you by telling you that the contract and policy documentation would arrive in the mail. That is a falsehood, and it will not suffice; you must see the contract immediately. Reputable third-party extended auto warranty firms will normally have the contract’s PDF version available for viewing on their website, including the program description, a sample welcome letter, and instructions.
5. Your Honda is brand new and still covered by the manufacturer’s warranty.
Because your car is brand new and has no flaws yet, and most failures are covered by the manufacturer of your vehicle for the first four years, the extended car warranty provider would not have to pay any claims for four years.
Many vehicle salespeople will try to persuade you to buy your Honda extended warranty on the same day you buy your car, claiming that if you don’t buy it today, you won’t be able to get it at all. They like making up some phony reason why you wouldn’t be able to buy it if you returned it later.
Also, bear in mind that if you have low credit, vehicle salesmen will lie to you and tell you that the lender requires you to purchase an extended warranty in order to qualify for the loan. Of course, this is a breach of the Truth in Lending Act, but most individuals with terrible credit are unaware of it, so this should be another reason to buy your new car extended warranty from an online auto warranty business.
6. Typical price hikes from extended auto warranty providers
The cost of an extended vehicle warranty is likely to be lower when your automobile is brand new. Many buyers may not have the funds to purchase an extended warranty at the time of purchase or do not want to finance an extended warranty into their auto loan, so they rationalize that they will purchase it when the standard warranty expires. This is a deadly trap into which you might fall, and there are two reasons why you should not continue.
Avoid the trap
First, don’t take advantage of the situation by waiting too long to get your extended warranty; the older your automobile becomes, the more likely you are to pay for it. Also, when your car’s original warranty nears the end of its four-year term and is ready to expire, the cost of an extended warranty begins to skyrocket.
This is a crucial deadline, but you don’t want to go too near to the expiration date, so the sooner you can get a warranty, the better. Consider the sands of an hourglass: as time passes, the cost of an extended auto warranty rises and rises.
The second reason you want to prevent any major delays is that warranty firms often have one or two price hikes every year, and you don’t want to be caught in numerous pricing cycles when you could have purchased it at a lower extended vehicle warranty cost earlier.
Here’s another reason why you shouldn’t wait too long: If your car model develops recognized maintenance difficulties, service bulletins, and recalls, all of the insurance actuaries and extended warranty business actuaries will suddenly determine that this is a dangerous automobile and raise the extended car warranty cost into the stratosphere.
You’re now in a problem since you missed out on purchasing it at a lesser price earlier and it’s now out of your price range.
Price hikes from extended warranty providers are unexpected, so we never know when they’ll happen. The easiest approach to prevent them if you’re going to acquire an extended warranty for your automobile is to get it as soon as possible.
7. Extended warranty for used automobiles with a manufacturer’s warranty that has expired.
In this case, you have a secondhand automobile with a warranty that has already expired, but you still want to purchase an extended warranty for it. Because the extended vehicle warranty firms realize that all the risk is now on them, you will pay the most. They may be willing to cover the entire cost of your car’s repairs.
Avoid the following trap:
Because the cost of an extended automobile warranty is higher now, with an expiration date approaching, many purchasers may scrimp and get the most watered-down powertrain warranty packages or wrap coverages with the fewest protected parts. Many purchasers fall into the trap of picking limited named-component coverage, which leaves them with many repairs on their cars that are not covered due to wear and tear.
To make the price more bearable for consumers, most extended warranty firms offer lower-grade, highly diluted warranty packages, but they leave out a lot of coverage. The important “wear and tear” coverage is one of the most prominent exclusions in these watered-down plans.
This slap in the face will come when you realize that after your car’s manufacturer’s warranty expires, practically every repair will be categorized as “wear and tear,” and your vehicle service contract will be refused.
If you selected one of the higher models that excluded bumper-to-bumper vehicle warranty policies, you may rest easy knowing that the superior, but more expensive contracts will cover wear and tear. This additional coverage provision distinguishes between the two types of extended warranty products.
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8. Get a used car warranty on the pre-owned vehicle you bought right now.
Also, a common vehicle buyer scam is to purchase a secondhand car with known problems, believing that by purchasing an extended warranty, the repairs will be covered. However, warranty firms are aware of the fraud and, as part of the validation period, many allow no claims for the first 30-60 days.
If you acquire a car with pre-existing problems and then try to submit a claim for it, other firms will raise an alarm. The validity period is 30 days or 1,000 miles for most extended warranty firms, such as CARCHEX, and is printed on your declaration page when your vehicle service contract documentation comes. During the validation period, no claims can be filed.
Another reason to acquire your warranty as soon as you buy your used automobile is to prevent tripping red flags. We encourage buyers to be cautious and assume a 90-day waiting period before filing any warranty claims. So, the day you acquire your secondhand automobile, start the 90-day clock.
People who acquire a used car may experience problems within the first few months of ownership, so be sure you have adequate coverage and have finished our recommended 90-day validation period, as well as the warranty company’s waiting time.
Before you go out and buy an extended warranty, get a hold of the contract and look at the portion that indicates what is not covered to see whether this warranty will cover wear and tear. This is one of the most crucial pieces of information we provide to customers.
9. Repairing your Mercedes AMG, Land Rover, or Porsche is pricey.
If you find yourself in this situation, the cost of a car extended warranty is not a problem. Your problem is finding an extended warranty provider that will cover your vehicle at all. Any of the Mercedes AMG series are common automobiles that extended warranty providers refuse to cover because they are so pricey.
AMG vehicles have exorbitant repair expenses. They may have to ship the engine back to Germany to be fixed by the engineer who designed it in some situations.
We’ve also seen most warranty providers refuse to cover recreational vehicles like Land Rovers in the past because of their high repair costs. The only way to get a warranty on many exotic automobiles and other high-priced vehicles is to contact the manufacturer and see if they offer an extended warranty.
In this case, we propose that you look up the forums for your vehicle and see what other people have done to secure warranty coverage. You could even discover user recommendations for dealers that would offer you a discount. On the Mercedes forum, for example, we discovered a dealer who sells the 60-70-80,000-mile maintenance package for hundreds of dollars cheaper than the other dealers.
10. Your automobile model has suddenly developed dependability concerns and requires frequent maintenance.
Your automobile may have been OK when you first acquired it, but as time passes, it begins to have a higher rate of repairs than other vehicles. The actuaries at extended warranty companies notice this information and utilize it to raise the price of the warranty since they know they’ll have to pay a lot of money to fix your car type.
It isn’t much you can do about this because it’s not something you can control. If you’re purchasing a used car, make sure it has a lot of positive ratings from previous owners and no big known concerns.
We avoided falling into this trap recently when acquiring a secondhand Mercedes E Class by consulting the JD Power database of the most dependable automobiles with the lowest repair rate per hundred vehicles over the past 36 months.
This method, combined with reviews and auto owner forums, can help you narrow down a model to consider and avoid a vehicle that would be too expensive to cover with an extended warranty.
11. Purchasing an extended warranty for your new automobile from the dealer.
This is another situation when you have little influence over the cost of a vehicle’s extended warranty, but at least you will be aware of the facts; with our help, you will be able to assess whether the dealer is providing you a decent warranty package at a reasonable price.
Due to hefty dealership markups, purchasing an extended warranty from a car dealer may result in you spending the most money possible. If you decide to get an Audi extended warranty this way, we strongly advise you to obtain a quote from one of the 3rd party vehicle extended warranty firms to compare to the warranty package offered by the car dealer.
Compare everything in both contracts, especially what isn’t covered, and don’t take the dealer’s verbal assurances seriously. The only thing that matters is what your car service contract says in writing, so compare apples to apples to see which is the better value.
In this circumstance, the only real power you have over the pricing is to turn around and walk out the door, showing them your heels, to avoid overpaying for a warranty.
12. The cost is also determined by the sort of warranty coverage options you buy.
Warranty firms will give you multiple levels of coverage to make warranties more accessible for individuals, ranging from terribly watered-down packages at the low end to full coverage exclusionary bumper to bumper extended warranty coverage at the high end.
The lower-cost “named component” extended auto warranty packages often cover the main components of your vehicle, such as the engine and gearbox. This is known as a powertrain warranty, and it just covers the engine and transmission at that cheaper price.
These named component warranty contracts are the polar opposite of exclusionary bumper to bumper warranties in that they itemize a limited list of covered components, whereas the far superior exclusionary warranties itemize a short list of components that are not covered with the best-extended car warranty.
You can see the significant difference in coverage between these two types of policies, which is why we highly advise you to choose extended warranty plans with exclusionary coverage. Imagine buying a used Hyundai for your teenage daughter and sending her off to college, and you want to ensure her car with a Hyundai warranty. But you don’t want her to be concerned about the car servicing contract’s gaps.
Powertrain warranties often do not cover any of your computer modules, as well as the more expensive $500 oxygen sensors and other emissions equipment that are regular failures in older vehicles. When the check engine light comes on, according to our study of the thousands of customers we’ve assisted, it’s usually an O2 sensor or another emissions-related engine part that has to be replaced.
13. Choose a policy with a $0 deductible
When purchasing an extended warranty, we recommend choosing a $0 deductible. The majority of deductibles for each appointment are $100. Although a $0 deductible car service contract is more expensive, and we are attempting to save you money, it is worthwhile since it means you won’t have to pay any more money at the time of the repair when you may be broke.
Some warranties use deceptive contract language to charge you a separate $100 deductible for each repair, including each visit. This implies you have four distinct covered repairs on your car today, and you will be charged a $100 deductible for each of the four repairs, for a total of $400.
This becomes a non-issue for you if you purchase a warranty with no deductibles.
These notions are crucial to remember, and they should help you navigate much more effectively. Please contact us if you have any queries about purchasing the best-extended car warranty.
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