An extended warranty for a newly purchased used car presents potential benefits to drivers. By understanding how an extended warranty (or service contract), secured through your dealership or an outside warranty provider, actually works you can figure out whether or not you will benefit from making the investment.
Future Repairs
The primary purpose for an extended warranty is to provide a financial cushion in the event of future repairs. Used cars are more likely to need ongoing repair and involved maintenance as they age, and this need for professional body and mechanical work can become expensive over time. An extended warranty can help remove the financial burden of ongoing repairs and prevent you from spending more on keeping a used car running than it is worth.
Warranty Perks
Many extended warranties offer perks aside from covering all or a portion of repairs. The most beneficial among these possible perks is a free rental or loaner vehicle that a driver can use while his car is being repaired. Use of a car during a possibly lengthy repair process can prevent lost wages and general inconveniences for a warranty holder. Other perks include free or discounted towing to a warranty-approved mechanic if the car breaks down and roadside assistance, like flat tire changes.
Expired Existing Warranty
When buying a used car, both from a private party and a dealership, it is important to know the status of any manufacturer warranties. If the age or mileage of the used car you are buying has caused the existing warranty to expire, the benefits of an extended warranty become increasingly relevant. On the other hand, you should carefully consider postponing the purchase of an extended warranty if there is an inclusive warranty still covering the car’s repairs and routine maintenance that is able to be transferred into your name.
Future Sale
Should you choose to sell your car on your own or through a dealership trade-in, an active extended warranty can increase the fair asking price. Just as dealership salespeople can use an existing warranty as a sales incentive, so can a current owner use a transferable extended warranty or service contract to make a used car sale more attractive to a buyer.
An extended warranty can save used car owners a tidy sum of money on future repairs and maintenance. Despite its sometimes expensive initial cost, an extended warranty can often make a lot of financial sense to smart buyers.
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