Purchasing Used Car Extended Warranties

| May 28, 2009

Consumers must do homework when it comes to purchasing an extended warranty on a used car. The same effort used to buy the car should be put into selecting the warranty.

The current economic climate is forcing consumers to examine every penny they spend. Depending on the situation, a used car extended warranty can offer not only a quiet night’s sleep but much needed coverage in the event of vehicle breakdown. Before getting to the stage of signing on the dotted line, there are several things consumer should take into consideration when purchasing an auto extended warranty.

Determine if a Used Car Extended Warranty is Necessary


Many used car owners purchase warranties to give them a sense of security. In the insurance industry, it’s called the ‘quiet night’s sleep’ protection. Prior to running out to purchase an extended car warranty for a used car, do a little vehicle history research.

If the used car is known for its reliable standards and quality workmanship, the chances of frequent warranty repairs are a low. Conversely, vehicles that have a known history of manufacturing defects, recalls and frequent repairs are prime candidates for auto extended warranties.

Consumers have the option of spending money on an extended warranty or setting money aside in an interest bearing account. Setting up a separate account for a vehicle with known reliability issues is a less attractive option than opening an account for a vehicle that is known to be stable and reliable.

Performing Due Diligence on the Auto Extended Warranty Company

After deciding to purchase an extended warranty for a used car, understand that warranties are most frequently offered through two types of companies:

  • The manufacturer, through the manufacturers’ extended warranty.
  • Aftermarket companies- independent companies that do not manufacture automobiles.

When selecting either of the above options, become familiar with the company’s financial standing. Most consumers are familiar with the financial stability of an auto manufacturer, but less so with after market companies. Therefore, it is important to perform due diligence by obtaining financial information from companies such as AM Best or Moody’s. Both companies gather statistics and data on the economic stability of financial institutions. Not limited to aftermarket companies, AM Best and Moody’s track the financial stability of institutions such as banks, insurance companies and other lending companies.

Extended Warranty Deductibles

After selecting a stable company and finding out the coverage offered by the extended warranty, consumers need to understand how much of a deductible they are responsible for and how the deductibles apply.

Deductibles are either applied on a ‘per visit’ or a ‘per repair’ basis. The per repair deductible is more attractive. It can conceivably take two or more visits to repair an auto malfunction correctly. If the warranty contract reads ‘per visit’ the vehicle owner would have to pay the deductible each time the car is brought into the repair shop.

Warranty Limitations on Places of Repair

When it comes to actually bringing the used auto in for a warranty covered repair, the vehicle owner should know if there are limitations on which repair shop to use. Some manufacturer extended warranties require the consumer to bring the vehicle back to the shop from which they purchased the warranty. Many of the aftermarket auto warranty companies do not have such a stipulation.

Having to bring the vehicle to the contract purchase site may not be a problem if the vehicle is garaged not far from the place of purchase. However, individuals who did not purchase the contract locally might find the stipulation to be extremely inconvenient.

Vehicle owners should exercise the same amount of diligence in shopping for extended warranties as they did when purchasing the vehicle. Always get at least three quotes before making the final decision.

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Category: Automobile

About the Author ()

Felicia A. Williams is a wife, mother, freelance writer and owner of Tidbits and Stuff.

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