The Federal Trade Commission has recently taken action to halt several companies from improper business practices involving the marketing and sale of extended automobile warranties. Even before this current flurry of improper behavior reached its current proportions, extended warranties were difficult to understand and obtaining the expected service was occasionally disappointing. It helps to know a few facts about extended warranties in order to hook up with an agreement you can depend on.
When does an Extended Warranty Really Help?
The extended warranty is basically a service agreement between you and the warranty company. For a fee, they agree to extend the current service plan you have on your car. It pays to buy the extended warranty if you drive over 1,000 miles per month and plan to trade your car in for quite a few years. It is much less expensive if you purchase an extended car warranty while the original warranty is still in effect. This type of protection is especially helpful for foreign cars or other vehicles which cost more to repair or have a tendency to need frequent maintenance.
Where to Get the Best Extended Warranty
If you buy a plan from the automobile manufacturer, like the GM extended warranty, you are promised coverage of virtually every component of your vehicle in the event of mechanical failure beyond the GM warranty period – even if it results from wear and tear. Plan to pay more for this type of coverage and be aware of some of the troubles auto manufacturers are currently experiencing in meeting their financial obligations.
Dealerships also offer service plans which cost less, but may not offer all the services you need at their location. Independent warranty programs offer the lowest price and more service outlets, but may not be around long to deliver what they promise. Regardless of which extended warranty provider you use, make sure they are BBB certified, allow transfer of warranty in the event of change of ownership, and accept major credit cards for payment. Avoid companies which require you to pay for repairs up front, have caps or exclusions on certain repairs, and those which pressure you to join. Make sure any business you work with has a strong history of customer satisfaction.
How to Save Money on Extended Warranties
Like car insurance, there are a variety of coverage plans which offer you the ability to choose the warranty just right for your needs. You can choose bumper-to-bumper coverage which excludes nothing, or opt for a plan to protect just the power train. In addition, consider opting for a higher deductible which will lower your rates. By learning all the variables, caviats and benefits of an extended warranty program, you can become more confident when you decide one is right for you.