You’re about to sign the papers for your new car when the dealer solemnly advises you to buy an extended car warranty to cover repairs after the included warranty expires. You squirm. The idea of more coverage sounds nice, but is this a good deal?
In fact, there really isn’t an easy or quick answer about whether to buy an extended warranty. But making a smart decision begins with understanding how certain warranties — mainly the bumper-to-bumper and powertrain warranties — work together and what they cover.
Included car warranties
All new cars come with a variety of warranties. The most notable is the bumper-to-bumper “factory” warranty, so named because while it’s sold by the dealer, it’s backed by the carmaker. New car warranties remain in effect for at least three years or 36,000 miles. The bumper-to-bumper warranty covers repairs to everything on the vehicle except “wear items” — those parts that wear out such as tires, brake pads and windshield wipers. The warranty doesn’t pay for routine maintenance such as oil changes and tire rotation.
Over the years, manufacturers have realized that including a stronger warranty is a good selling point. Carmakers such as Hyundai have boosted sales in part by including a five-year, 60,000-mile bumper-to-bumper warranty. Manufacturers known for dependability, such as Honda and Toyota, have shorter warranties because their reputation is, in a sense, their warranty.
Even after the bumper-to-bumper warranty expires, there’s still the included powertrain warranty, which covers the cost of repairs to everything that moves the car down the road: the engine, transmission and suspension. These warranties also are considered effective sales tools and have been lengthened to increase sales. For example, Chevrolet includes a five-year, 60,000-mile powertrain warranty.
Extended car warranties
So where does an extended warranty fit into this picture? If your car breaks down after the bumper-to-bumper warranty expires, you’ll have to pay to get it fixed. But if you bought that extended warranty, as the dealer recommended, the repair will be made at no cost to you.
Extended warranties come in a dizzying combination of mileage extensions and deductibles that can lengthen the bumper-to-bumper warranty by 20,000 miles or more. Few details are available online because the dealer wants you to contact it directly — and get a sales pitch. Extended warranties often are bundled with other types of coverage, like a free rental car, and given names such as the platinum or silver plan. Carefully review what items are covered by the extended warranty before you buy it.
Also, the dealer might sell “third-party warranties,” which usually cost less but are issued by a company not connected with the carmaker. These warranties might require you to pay for repairs yourself and then apply for reimbursement.