4 Reasons Why Your Car Needs an Extended Warranty
by Steve Dearborn
While first-time car buyers prepare for various aspects of one of the biggest purchases of their lives, an important investment tends to be overlooked or dismissed: the extended auto warranty. For some consumers preparing to spend thousands of dollars on a new car that already has a manufacturer warranty, declining an extended warranty seems like an easy way to cut money from the total cost. However, extended warranties should be viewed as similar to insuring your own health in that spending the little extra now could help you avoid spending a lot more later.
If you are preparing to buy your first automobile, here are four reasons why the extended warranty is a good idea:
Peace of Mind — As the old proverb goes, “Hope for the best, prepare for the worst.” While many car buyers are tempted to believe that performing regular maintenance and taking good care of their new vehicles will help insulate them from catastrophes, it is impossible to anticipate the many unforeseen issues that can arise with complex engines. Additionally, it is becoming more expensive to deal with such issues. CarMD reported that the average repair cost rose 10 percent to $367.84 on 1996 to 2012 model year vehicles. An extended warranty can eliminate or significantly reduce out-of-pocket costs for a car owner when a vehicle needs repairs.
Return on Investment — Consumer Reports noted in July 2013, that respondents from a previous survey paid $1,000 for an extended warranty on average. If that amount sounds like a lot, consider the average cost of some “check engine” light-related repairs. Repairing or replacing a hybrid battery costs nearly $3,000, and a hybrid inverter assembly can cost more than $4,000, according to stats compiled by Arrigo West Palm Beach. It can cost over $2,500 to repair or replace a fuel injection pump, more than $3,000 for a gas mass sensor or supercharger, and costs can be nearly $4,000 for transmission and torque converters.
Additional Perks — Extended warranty packages can offer additional benefits that may not be covered under your regular auto insurance. These can include 24-hour roadside assistance and rental car reimbursement if you have to take your automobile into the shop. In October 2013, Auto Rental News reported that Enterprise Rent-A-Car’s Automated Rental Management System (ARMS) data showed vehicles are in the shop for an average of 13 days, leading to out-of-pocket rental fees of up to $400.
Resale Value — Just as you would likely prefer to buy a used car still under warranty than a vehicle that is not, being able to offer that protection if you sell your automobile will let you offer that additional peace of mind to potential buyers. Autos.com estimates most extended warranties only cost $50 to transfer, and a vehicle warranty from Carchex like the Extended Vehicle Protection Plan is fully transferable for a $50 transfer fee ($40 for Florida residents). As Carchex notes, this “can greatly increase the resale value of your vehicle should you ever choose to sell it.” Investing in an extended warranty now may not only save you thousands but could even help you make additional money.
About the Author:
Steve Dearborn is a fan of antique cars and the Boston Red Sox.