Extending your vehicle's warranty might seem like a good plan, but how do you know if it's a bargain? Here are some do's and don’ts.
1. There are TV ads, online pop-ups and even telemarketers working to sell us warranties. What's the first thing we should ask?
First, as tempting as the deal might be, don’t buy anything or give your credit card number until you’ve seen your policy in writing. Buying an extended warranty – whether it’s on your car or a toaster – needs to be weighed against a number of factors before you can decide if it’s a real bargain, and the time to decide what’s important is not during the initial call. Make sure you ask who actually is writing the warranty and who is responsible for paying for the repairs. In some cases, you’ll be responsible for the entire repair bill, then the warranty company will reimburse you for some percentage of the covered jobs.
2. How can we tell if it's a good value?
If there was ever a place where reviewing the fine print in an agreement was important, this is it. A lot of warranty companies have been accused of contacting the owners of vehicles that the business knew would not qualify under their programs, collecting the money for the warranty payments, then bailing out on the agreement. Should the customer have reviewed the warranty more carefully? Sure, but warranty companies should state their exclusions clearly and not actively market to out-of-date or over-mileage clients. Speaking of mileage, one of the more common exclusions warranty companies will use to deny a claim is the mileage. For instance, your transmission may fail at 80,000 miles. The warranty may only cover up to 70,000 on the transmission, but up to 100,000 miles on the water pump or other repairs. You need to know what’s covered, what major repairs you’ve recently done on the vehicle, and decide if it’s worth the price of the warranty to gamble on other failures.
3. What should we do before we take the vehicle in for repairs that should be covered under an extended warranty?
First, call the repair shop and go over both the needed repairs and the warranty. If necessary, show your mechanic your copy of the warranty to make sure that he accepts or even wants to work with the warranty company. It also pays to take a minute to confirm with your warranty company – directly ask exactly what percentage of the work, materials, parts and labor the warranty will cover and ask yourself if you can live with your end of the bill. As a last step, double check the warranty itself, particularly whatever work you’re having done that day. Look for any loopholes that the warranty doesn’t directly mention or that might cause problems in the future. Don’t be afraid to have your mechanic talk to someone at the warranty company to go over the repairs before he starts.