If the manufacturer warranty that came with your car is expiring soon, you may actually start to listen to those extended warranty robocall messages on your phone. But is an extended warranty – also known as a vehicle service contract – worth the money?
Surveys of consumers who have purchased these warranties have found that most people didn’t save money with them. One Consumer Reports survey found that over half of those questioned didn’t use it at all. Those who did, on average, paid more for the coverage than they would have paid if they’d covered the full cost of repairs themselves.
Financial expert, author and radio host Dave Ramsey puts it bluntly: “The fact is, extended warranties are overpriced….I don’t recommend buying extended warranties, ever. If you can’t afford to repair your car, then you can’t afford the car.” Instead, he recommends putting money in an emergency fund in case you need it for an unexpected and costly repair.
If you get an extended warranty, do your homework
If you still feel better having some type of warranty, you should put in time shopping around for coverage. Typically, if you begin looking while your vehicle is still under its original warranty, you have a better chance of getting a good rate and perhaps other benefits from a reputable company. You definitely want to stay away from any place that’s doing robocalls.
No matter whom you purchase your vehicle protection from, you need to read the fine print on the contract before you sign on with them. If you’ve purchased an extended warranty and then found that the company didn’t abide by the terms of its contract, you may have grounds for legal action.