Why not all extended car warranties are scams and what you need to know
If the phrase “extended car warranty” sends a chill down your spine and brings back bad memories of robocalls warning that your coverage is about to expire, you’re not alone. Years of unsolicited calls, texts and official-looking mailers have made the product category almost synonymous with scams.But that doesn’t mean every extended warranty is a rip-off. Automakers, dealerships and independent companies like CarShield sell legitimate vehicle service contracts that can cover certain repair bills after a manufacturer’s warranty expires.The challenge is figuring out whether the contract you are being offered provides useful protection or simply adds another expense to owning a car.The first thing to understand is that what people commonly call an “extended warranty” often is not technically a warranty at all.
A manufacturer’s warranty generally comes with a new car and promises to repair certain defects or malfunctions for a specified period or number of miles.And when you buy a car from a dealership, you can also often buy an extended warranty for the same coverage.A vehicle service contract, on the other hand, is an optional product you buy separately.
The company providing the service contract agrees to pay for certain repairs or services described in the contract.For some drivers who are planning to keep a vehicle for years after its original warranty expires and who may face a greater chance of repairs as the car ages, an extended service contract could ultimately save on repair costs.The key to getting a fair deal with a vehicle service contract is to consider the contract’s price, what repairs it covers, how long you expect to keep the car and how you expect to use it.
A service contract can pay some repair costs beyond what a manufacturer’s warranty covers or after that warranty ends, but it does not mean every breakdown will be covered.In some ways, a service contract is like an insurance policy: For folks who have the money to pay fo...