All car dealerships, at time of sale, will offer what *they call* and “extended warranty” for purchase. In California, these are actually *Service Contracts* (Mechanical Breakdown Insurance). These take the factory warrany coverage and extend it out more years, and many more miles. Typical would be out to 7-8 years or 100,000-120,000 miles. IF a covered component fails, it’s replaced.
Are they worth it? – YES. The reason is todays labor costs. Dealership labor rates are often $250/hr. or more. ANY car repair becomes a multi-thousand dollar outlay if there is no “extended warranty” coverage. An engine can be $6,000-$35,000, a transmission $7,000-$11,000, a failed air conditioner compressor can be $1,300-$2,000.
Regardless of car make, repairs are astronomical.
The other reason for purchasing an extended warranty is that while you are making those car payments for 5 years, can you AFFORD a out-of-warranty repair at all?
What do these cost? Depending upon the plan and coverage, these typically cost $2,500 to $4,500. Let’s assume its a $3,000 policy premium. This will add about $50/mo. to your car payment on a 60 month contract. If you have a out of warranty repair, $50 on the car payment you can afford, a repair bill for thousands you may NOT be able to afford.
Next, factory or aftermarket (dealer brand). ALWAYS the manufacturers extended warranty. Their name/logo will be right on it. Insist on it for the easiest claims process. Are the aftermarket ones bad? No. They just require pre-authorization on claims, and many of them have cleverly hiddens loopholes for denying coverage. So – read carefully.
It should be noted that repairs done under these “extended warranties” can NOT be used on a California Lemon Law claim, as they are not “warranty”, they are Service Contract (insurance) repairs.
Your vehicle you purchased brand new or CPO used – has it seen to many repeat trips to the dealer for warranty repairs for the SAME issue? Call us at 1-800-225-3666 for a free case evaluation.
