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How To Use An Extended Warranty On A Car
That’s why owners take whatever steps they can to reduce the amount they need to shell out whenever possible. That’s where extended warranties come into play. Assuming these kinds of plans have a reasonable amount of coverage, they can be a godsend.
That being said, it’s not uncommon for people who’ve opted for extended warranties to not ever actually use them. That’s why every individual needs to make an informed decision themselves. In this article, advice on how to use a car warranty properly will be provided.
There’s always the warranty which comes with manufacturer; it’s oftentimes enough for drivers, but they can then find themselves caught in the wind when it expires. The costs which accumulate after this point may or may not exceed the significant costs and a lack of comprehensive coverage commonly associated with extended warranties. To figure out what’s best for you, you’ll need to answer some important questions: what kind of driver are you? What kind of environment do you drive in? What kind of financial situation are you in?
Consumer Reports conducted a survey which determined that some 55% of participants who purchased an extended warranty ended up never using it – and only about 25% said they would obtain another similar package. When these warranties were used, the costs associated with most repairs were found to be lower than what was paid for the warranty in the first place. For some consumers, the most ideal decision is to save up the money they might have intended to spend on the extended warranty. That funding could instead go directly to repairs.
The more informed you are about this matter, the easier it’ll be to make the most financially sound choice. The inner workings of extended warranties aren’t too complicated, allowing informed consumers to weigh the pros an cons of obtaining one. It should be noted that the item to be described from here on out doesn’t actually follow the definition established by federal law, and is therefore not subject to the typical degree of protection for consumers. For those wondering are extended car warranty tax deductible, we will cover information like that. With that said, let’s take a closer look at the ins and outs of extended warranties to help you decide which route to take:
How To Use A Car Warranty
Extended warranties are a type of optional contract for vehicular service. They’re traditionally used to help consumers cover part of the bill for a number of repairs and kinds of service cars and other vehicles need throughout years of ownership. Oftentimes they kick in after the manufacturer’s warranty runs out, but it’s not impossible for them to occur simultaneously.
As previously stated, extended warranties can’t be applied to everything. According to Ardent Credit Union’s auto expert Steve Roberts, a majority of warranties focus on issuing coverage where the initial warranty doesn’t. For example, extended warranties are known for covering standard maintenance, including tires, brakes, roadside assistance, and oil changes. Read every word of whatever contract comes with the warranty to make sure it has what you’re looking for.
It’s no secret that extended warranties are often marked up in price so that dealers can make a profit off of them. It’s a good idea to negotiate the price down if possible, or at least do some research by examining third party providers to see if a better rate is out there.
Coverage will vary considerably in terms of available options. You’ll also have to take into account your car’s make and model. On average, a warranty will run you anywhere from one to three thousand dollars upfront. Combining this price with a car loan will result in an accrual of interest and additional fees.
There also might be an extended car warranty deductible to pay. This fee often comes in one of two forms: either on a per repaid basis, or per every visit for warranty service. It’s up to you to figure out how the deductible will factor into you purchasing plan. You don’t want have to pay more than one deductible for a single repair, and it’s well known that some car issues end up requiring more than one trip the body shop.
New Or Used?
Are extended warranties better for new or pre-owned cars? For at least a couple of years, a new model traditionally won’t need this kind of coverage thanks to the factory warranty, a service which is more often than not incorporated into the final price of the vehicle.
In the event that you purchase a pre-owned car from a dealership, there’s no guarantee that the manufacturer’s warranty will provide coverage. The guide found of one of the car’s windows will have more information on this matter. If that is the case, it might cost you an additional fee to have the warranty transferred over to you.
If the used car you buy isn’t covered by the factory warranty anymore, or if it is and you decide to acquire more coverage once it runs out, you’ll probably be able to pay to add an extended warranty.
Every manufacturer rolls out their warranty for a different length of time. Most deals include bumper-to-bumper coverage for either 36,000 miles or three years, whichever occurs first. Another popular type of warranty, the powertrain warranty, usually lasts for 60,000 miles or 60 months.
Are extended car warranty tax deductible? They can be. It depends on an evaluation of economic performance by the expense which is intended to be deducted. Something called an all-events test must be conducted by the provider to determine whether their liability can be reasonably estimated.
Bottom Line: Are They Worth It?
Costly repairs are always unexpected, so some type of coverage would always be a wise idea. It’s similar to car insurance (if it weren’t already legally mandated), in that it’s not fun to pay for at first, but when it comes in handy, it’s something to be very grateful for. Having the provider of the warranty foot a majority of the bill (minus the deductible) is usually a great relief for car owners.
Keep in mind that it is demonstrated that most consumers never end up using the extended warranties they purchase. Do you have a “better safe than sorry” mindset? Or is frugality the name of the game for you? Paying for overlapping warranties is a cost many can’t cover, especially since the extended warranty can have plenty of gaps in its coverage. The provider can also always go out of business, leaving you with unexpected, and sometimes exorbitant costs. An extended car warranty deductible can be pricey. No matter what choice you make, do as much research as possible before landing on a decision. The last bit of advice? Drive safely!
