How Extended Car Warranties Work
You probably would not buy a new car without a warranty of some kind, right? But the fact is that most new cars never have to use that warranty and it’s only after the manufacturer warranty has run out that cars start to have problems.
So it’s the vehicles without a warranty that really need protection from expensive auto repairs, since even a minor problem can cost a fortune to repair.
So your car breaks down on the highway. If you have an extended warranty all you need to do is call the company and report a claim. If you need a tow they will offer that for free as well and take your car to a licensed repair shop. The warranty company will then want to talk to the mechanic on the phone and they will pay the shop directly with a company credit card. No expenses out of your pocket unless you have a deductible.
Most new cars come with manufacturer warranties that will usually last for 36,000 miles or 3 years, whichever comes first. In some cases these warranty contracts will last longer, but when that warranty runs out you are left completely unprotected from major auto repair bills.
This is where an extended car warranty comes in. In fact, they are vehicle protection plans or extended vehicle service contracts since a “warranty” can only be offered from the maker of the product, but since so many people still use terms like “extended car warranties” and “auto warranties” that is what most companies call them as well and that is what we will call them on this website. The truth is you can get even better coverage on your used car than the one that comes straight from the manufacturer with some of the warranties that we recommend on this website.
So here is how it works
These vehicle protection plans work just like a manufacturer’s warranty, except that they can offer even more coverage and protection, and they offer more flexibility as well. What kind of flexibility? Well if you have a dealer’s warranty or one from the manufacturer you will have to go to THAT dealership or that same auto maker’s dealership to get any work done. In fact, if you DO go to another mechanic that you trust your warranty will no longer be valid. Dealerships want to keep all the money in house but this makes it harder for people with car problems to actually USE their warranty coverage.
With a vehicle protection plan from a 3rd party you can get FREE parts and labor with your car at ANY ASE licensed repair shop in the U.S. and Canada. So you can take the car or truck to your favorite and most trusted mechanic as long as they are licensed.
How many ASE repair shops are there? There are over 30,000 in the U.S. alone so chances are that wherever you break down you can find a licensed shop to fix your car that will accept payment from your extended warranty company.
And even if there is not a repair shop close by, most good warranty plans come with towing and roadside assistance so you can get your car to the shop without any hassles and extra money out of your pocket.
But do I really need an extended warranty?
Some people will say that you can just open a savings account to pay for any auto repair bills along the way instead of buying an extra warranty. But here is the problem with that idea. First of all, how many people do you know that are actually doing that? Most of us have good intentions but nobody wants to save money for something that we all dread.
Secondly, the cost of repair bills is only going up as cars get more sophisticated. When you buy an extended vehicle protection plan you are able to lock in a low rate and even if prices skyrocket a couple years later your coverage is already paid for and you can get work done on your car for free.
Also, an extended warranty offers more than just free parts and labor on your automobile. Most good warranty contracts come with free roadside assistance, towing, car rental, and even hotel discounts if you are stranded somewhere.
Here’s the bottom line
No one wants an extra expense since it costs enough just to put gas in cars these days. And yes, you can just pay for repairs yourself along the way. But do you want to? And do you know how much that transmission will cost to replace? Most people buy extended warranties because they just want peace of mind. So if the car does break down, who cares? Parts and labor will be paid for and you will not have to spend an extra penny out of pocket.
You should also consider that just ONE major repair bill will more than pay for the cost of an extended warranty.
How the payment process works
After you get a free quote that we offer through our site, you will be able to look at different types of coverage for your vehicle. You will be able to read the contracts as well to see exactly what IS and what is NOT covered. With exclusionary coverage the list is so long of what IS covered that they usually only list what is NOT covered because it takes less space.
Then you can see the exact price for different options. The coverage can be anywhere from 3 years to 5 years and longer and up to 100,000 miles in some cases. The price can be as cheap as 50 cents a day, but you have the option to pay for the whole thing at once or split it up into easy monthly payments. The good companies will not charge any interest of you choose the latter option.
How to know who to trust
The entire extended car warranty industry has been given a bad name because of some scams that were going around. Most of them were targeting emails and phone numbers and they would pretend to represent the car manufacturer. You should never trust a car warranty company that contacts YOU first without you doing anything. You can also read our page on what to look for in a good car warranty company to make sure you are only dealing with a reputable service.
The company should have a good rating with the BBB and a clear contact number for you to call them. Here on ExtendedCarWarrantys.com we only deal with the most reputable companies online. We know that if we only refer business to the best companies we will gain the trust of our visitors and they will refer their friends to us.
Who we recommend
We have looked at many extended car warranty companies online and talked to others who have used them and have come up with a short list of top rated companies.
The one that seems to always come out on top is Carchex. You can get a FREE instant quote with Carchex here. We like them so much we have partnered with them and have been offered a material connection through their affiliate program. We say this to be completely transparent, but their results speak for themselves.
If you have any other questions about how car warranties work feel free to browse our FAQ page or check out Carchex.com to see what kind of plans they offer.