Ensuring the car runs effectively

One of the most important decisions you'll grapple with before purchasing a car is whether or not to get an extended warranty. On the one hand, you have assured protection against costly repairs once your free warranty period runs out. On the other, you may pay for it but not really take full advantage of the warranty. How do you make sure that you get the most out of the extension in order to make your investment worthwhile? Read on to learn more.

1. New vs. used cars

Getting an extended warranty is a no-brainer if you're buying a used car. Given that its previous ownership history is unknown, it isn't uncommon to have major unanticipated breakdowns soon after you purchase the car. Certified pre-owned cars typically come with a warranty, but getting it extended can actually save you a lot of money once the warranty period runs out, since used vehicles are more prone to breaking down.

For new cars, the considerations are slightly different. Of course, you would not willingly buy a vehicle that would start misbehaving a year into your ownership – this is why you conduct extensive research during the shopping phase. Instead, consider how long you're looking to own the vehicle. If you frequently change cars, an extended warranty may end up being unused by the time you want to resell the car.

Another point to consider is that warranties are also attached to mileage. Therefore, if you use the car to travel long distances, e.g. for work, you'll hit your warranty mileage much sooner and be unprotected after that. Getting an extended warranty would be wise since the more the car is used, the more likely it is to break down.

2. Warranty terms

Extended warranties can be offered by the car dealership, manufacturer or a third party insurer. The best extended warranties are those backed by the manufacturer, since they can be redeemed at any dealership that stocks that manufacturer's car (ensure this is listed in the terms). Third-party warranties are typically only redeemable at the dealership in which you bought the car and so could be limiting, especially if you travel extensively.

In addition, warranties have different terms depending on the manufacturer. To get the most out of your warranty, consider your present and future requirements of the car to ensure that you have the best coverage. For instance, if your warranty doesn't offer roadside assistance, you can negotiate to have it included in your extended car warranty. Also, negotiate to remove restrictions on places where the car can be repaired if you're a wanderer.

Some extended warranties offer bumper-to-bumper coverage, while others limit to certain repairs/portions of the car. Knowing what's included in your warranty is very important, as is knowing the terms that void the warranty. Ensure that you read through the fine-print and learn what deductibles are applied. Weigh these against your real-life driving experience (problems you have gone/are likely to go through) and the user reviews for new cars (problems other owners of that car have had) to determine the usefulness of each item.