Auto sellers often tout the benefits and safety of buying an extended warranty, but not everyone gains from buying one. In addition, auto warranties may not cover all types of damage a car may experience, as each and every warranty is different.

Identification

Extended warranties are contracts that cover certain mechanical repairs, such as radiator leaks, and maintenance procedures, such as oil changes, during the length of the agreement. Extended warranties are not included with a product or its price; warranties included with a car are called manufacturer warranties.

Time Frame

While many people choose to purchase an extended warranty when shopping for a car, consumers may purchase one at just about any point in the car's life. Extended warranties typically last anywhere from two to seven years.

Types

The car's manufacturer usually offers extended warranty options, but third-party companies (called an "aftermarket warranty" business) that deal specifically in extended warranties also sell them. Both may subcontract warranty administration to another entity. In addition, "wear and tear," such as a seat-belt wearing out, and serious mechanical failure are typically sold as separate warranties.

Benefits/Disadvantages

Consumer Reports believes that auto extended warranties do not usually save more than they cost, since modern vehicles are highly reliable. On the other hand, very cautious people may feel safer having extra security against car trouble.

Tips

Consumers should consider how long they plan to keep a car before buying an extended warranty. An extended warranty does not offer much benefit if the car will be owned for only two or three years, since the factory warranty often covers most damage during this time. Also, warranties should be considered based on coverage, not price.

Source:

Edmunds.com: Understanding Extended Warranties

CarBuyingTips.com: Auto Warranty Buying Tips

Consumer Reports: Extended warranties: A high-priced gamble

More Information:

ExtendedWarrantyInformation.com: What are extended warranties?