Ray and Zach Shefska, the father-son-duo that created CarEdge, a purely online car-buying experience they curated together by combining Zach’s experience with web development and business with Ray’s 40-plus years as a car salesman, say you might want to hold back on an extended warranty.
An extended warranty, in case you didn’t know, is an attractive add-on from third-party companies that promise to cover a myriad of potential issues that may come with the car you’re buying. New or used, an extended warranty is usually offered.
For a little extra per month on top of your loan and elevated insurance premium, you can have “incredible” coverage that’s designed to help pay for expensive repairs. Sort of like how pet insurance or car insurance works.
Ray Shefska, who spent 42 years as a sales manager training car salesmen in New Jersey, says for most drivers it’s a waste of money.
“Both extended warranties and vehicle service contracts protect your wallet,” he said. “But the difference is who sells you the plan.”
Depending on the manufacturer, brand-new cars are covered for up to 100,000 miles on the engine and transmission. For instance, if you’re buying a new Hyundai or Kia, engines, powertrains, and transmissions are covered for 100,000 miles.
Each warranty is different per automaker, so it’s important to understand the factory warranty before signing up to buy a new car. If you’re buying new or used with low miles that keep it in factory warranty parameters, an extension isn’t necessary, his website further explains.
However, if your car is getting close to the mileage or time limit for your manufacturer, you might want to look into an extended warranty. You can always buy a warranty plan after you buy the car from a third-party company, too.
Used car out-of-factory warranty parameters may need one, though
If you’re buying a used car that’s no longer covered under the manufacturer’s warranty and you aren’t mechanically inclined, an extended warranty may be smart. But it’s important to note that a third-party company’s rates will almost always be cheaper than buying one from the dealership.
Some manufacturers offer their own extended warranties too, so it would be smart to compare coverage details, price, and availability before picking one over the other.
When shopping for an extended warranty plan, be sure you read the fine print to make sure it provides adequate coverage. Be sure to look for things like mileage limits, duration of coverage, what sorts of engine, transmission, and electrical repairs are covered, what’s excluded, how much the deductible is, and what other benefits are offered.
For example, some plans will help cover rental car costs or offer roadside assistance, too.
