3 Things to Consider When Deciding If You Need an Extended Warranty on Your Car

car warranty

During the later stages of the car buying process, after you do the test drive and negotiate the price with the salesperson, you will most likely find yourself in the dealership’s finance office. This office is where you will hammer out financing (if needed) and any other add-ons to be included in the contract. Such add-ons could include things like gap insurance and extended warranties.

Deciding whether or not to opt for the extended warranty can be a difficult task. However, by asking yourself a few key questions, you can be sure to make the right call.

1) Is the warranty inclusionary or exclusionary?

When it comes to extended warranties, there are two main types – inclusionary and exclusionary. Though this may sound like a nuance, the difference between the two can be quite large. Whether the agreement is inclusionary or exclusionary will be governed by the wording of the contract. If you take out an inclusionary warranty on your vehicle, the dealership will only be responsible for repairing issues that are explicitly included in the wording of the contract. For an exclusionary warranty, the opposite is true. Exclusionary policies mean that the dealership is responsible for fixing anything that goes wrong with the vehicle except for anything that is explicitly excluded. Generally speaking, you are better off with an exclusionary policy – though you will still need to review the exclusions carefully to avoid any surprises.

2) Where can you bring your car for repairs?

When reviewing any extended warranty policy it is important to check where you can bring the vehicle to be repaired under the terms of the agreement. Some warranties will say that you can bring it to any authorized dealer, while others will specify just a select few (maybe even just one) dealer. Again, you want to leave your options as open as possible here to avoid a situation where you are travelling and there are no approved repair shops nearby, meaning you could be out-of-pocket for any repairs.

3) Do I need an extended warranty?

This question is more psychological than mechanical or financial. For some drivers, the prospect of driving a car outside of warranty can be terrifying. The knowledge that the car could break down at any moment and they would potentially be left with a huge repair bill can be too much for some. If this is the case for you, an extended warranty might be a good idea – for the sake of your own mental health. Though certainly not the case for everybody, for some people an extended warranty simply means peace of mind from the risks involved in vehicle ownership.

Ultimately, the question of whether or not you should opt for an extended warranty will depend on your own personal and financial circumstances. However, by asking yourself the right questions you will have the knowledge you need to make the best decision for you and your family.

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