General Buying Information

Extended Auto Warranty: Are They Really Necessary?


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Almost invariably, a car dealership will attempt to sell an extended warranty to every customer who purchases a vehicle regardless of whether it is new or used. Is an extended warranty worth the cost, or is it simply another way for the dealership to earn a profit? The answer, not surprisingly, depends on the buyer's personal values.

A car dealership's primary goal is to make money, and selling extended warranties is no exception. The rates for each warranty are a complex calculation based on the make, model, mileage, and various other factors. Statistically, the total amount of the payments is likely to be more than the total amount of the repairs performed under the warranty. However, an extended warranty can be a viable purchase for many customers. A warranty can provide peace of mind and reduce the anxiety that often accompanies buying a vehicle, particularly a used one. For instance, many customers dislike bringing their car in for repair because they do not possess a good deal of technical knowledge about automobiles. They may feel that they are at the mercy of the mechanic when it comes to the diagnosis of a problem and the cost of repairs. With an extended warranty, this is not an issue because the warranty payments will be the same regardless what mechanical issues arise. While getting an extended warranty for a new car may seem unnecessary, it can be worthwhile if you value the comfort a warranty provides and plan on keeping the vehicle beyond the life of the factory warranty. When it comes to used cars, a warranty can make a person feel more comfortable with their decision. A common fear amongst used car buyers is that problems will appear shortly after the purchase, and a warranty protects against such an incident.

An extended warranty is essentially the same thing as an insurance policy. While the odds are that it will cost more than any repairs made, it provides security in the event that something unforseen does go wrong.

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