Extended warranty

What is Extended Warranty?

An extended warranty, sometimes called a service agreement, a service contract, or a maintenance agreement, is a prolonged warranty offered to consumers. The extended warranty may be offered by the warranty administrator, the retailer or the manufacturer. These warranties extend the period of the manufacturer's standard warranty and are usually not "double coverage". For example, a refrigerator's extended warranty covers two years past the manufacturer's one year warranty. Extended warranties cost extra and for a percentage of the item's retail price. In retail consumer electronics, extended warranties cost 20% to 30% of the price, and give sales associates up to 15% commission at some retailers.[1][2] Occasionally, some extended warranties that are purchased for multiple years state in writing that during the first year, the consumer must still deal with the manufacturer in the occurrence of malfunction. Thus, what is often promoted as a five-year extended guarantee is actually only a four-year guarantee.

Guide to Extended Car Warranty

Extended car warranties are sold on the basis that they can offer car owners peace of mind. Our guide to extended warranties discusses exactly what is involved in purchasing the right warranty for your vehicle.

The first thing to note when it comes to buying extended car warranties is that you don't need to buy them via your car retailer. In fact, purchasing a car warranty policy from a car dealership or car supermarket is often a bad start to make.

Car retailers have been looking to sell more and more warranty policies, feeling able to make some extra money by charging relatively high prices for warranty policies.

By shopping around, you should be able to find extended car warranty policies being sold direct by independent car warranty companies, often at a fraction of the price.

The quality of car warranty policies can vary considerably, meaning that it's vital that you know exactly what is covered before buying a policy. For example, your policy may cover work being carried out on your vehicle, but does it also cover the cost of you having a hire car during the period that your own vehicle is off the road?

This is something that you would expect to have included in your car warranty policy but you cannot assume that it is offered by all companies - many will not include these costs.

You also need to look at the excess charges that are included within car warranty policies. An extended car warranty policy with a high level of excess may turn out to be a false economy.

The best way to secure the best extended car warranty for your needs is to ensure that you shop around before buying a policy. Make sure that you are aware of the different levels of cover on offer and the different pricing bands.

By making an informed decision, you can get an extended car warranty that suits you.

6 Tips about Extended Warranties for your Car

1. The first this you should ask yourself is whether or not you need an extended warranty.

On average, most automobile manufacturers offer a 3 year or 36,000 mile bumper to bumper warranty. However, if your drive more the 12,000 mile per year and plan to keep your vehicle for a long time, then an extended warranty may be what you are looking for to get that peace of mind.

2. How reliable is your car?

You should take a look at the reliability history of your automobile. Even though this not fail-safe, it will give you an idea of how much service you can expect. This information should be kept in mind when looking at an extended warranty.

3. What is the track record and history of the company?

Here are some question to ask yourself about the company:

- How long have they been in business?

- How quickly do they payout to get a repair?

- Do they offer roadside assistance?

- Are there testimonials from other consumers you can read?

- What is they standing with Better Business Bureau and other consumer watchdogs?

4. What about the repairs, can they be done at any repair shop?

It's best to choose an extended warranty that, at the very least, gives you more than one service facility to choose from. You'll most certainly appreciate this if your vehicle ever need service while you're on a road trip, miles away from home.

5. How do you know which plan is right for you?

If you want bumper-to-bumper coverage the up front cost will be higher, but this offers the most coverage. If you select a higher deduction per repair and you automobile is trouble prone, you may end up spending more money in the long run. Read the fine print!

Here are some questions to ask when selecting a plan:

- Is the plan transferable or renewable?

- Where can you have the repairs done?

- Do you have to outlay cash up front for the repairs and wait for a reimbursement?

- Does the plan offer any roadside assistance? If you travel a lot or have long commutes, this type of plan may be just right for you. With travel assistance you can get:

- car rental reimbursement

- food and lodging

- flat tires repaired

- gas if you run on empty

- a tow

- and etc.

6. If you make the decision to get an extended warranty, there are three type to choose from:

- Manufacturer: typically, no problems about the cost of a repair but this has the highest up front costs and repair shop might be limited in your area.

- Dealer: has a lower up front cost and you get the plan at the same place you bought the vehicle, but there is usually only one point of service for repairs.

- Independent: has the lowest up front costs, typically 30% to 50% lower than manufacturers and dealers, however, coverage may not be as expected.

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