What should I consider when comparing extended warranty options?
It is important to first determine if purchasing a warranty is right for you. If you purchase a vehicle, and tend to keep them for a longer period of time (perhaps beyond the factory warranties expiration) a warranty may be right for you. Even if you do sell your vehicle before the warranty expires, they can generally be transferred to the next owner increasing resale value, or cancelled for a partial refund of the unused balance.
Price is important, but it is not the only thing to consider. Many of the manufacturer extended warranties may have more upfront cost than its aftermarket counterparts, but what is the coverage? If one warranty is more expensive than the other, does it offer additional coverage that may be beneficial for you? It is also important to determine whether or not there is a deductible involved. If you need to pay a $100 deductible every time you go in for repairs, does this make sense for you?
Some warranties also require that you pay for the repairs and then submit receipts. Will this financially make sense for you?
Find out what is covered by the warranty – does it cover “wear and tear” items, mechanical breakdown, or major components only? Every warranty is a little bit different, and mechanical breakdown coverage is the most commonly seen and available.
The most important thing it to compare all aspects of the warranties you are considering and read the fine print!