What About Extended Warranty or Service Contracts

Should you buy one or are they a waste of money? ...

Extended Warranty or Service Contracts

Despite what you might have read, Extended Warranties or Vehicle Service Contracts, as they are actually known, are a good idea. Even the best cars break down and when they do, they are very expensive to repair. (They can be placed on both new and used cars or trucks)

What is an Extended Warranty / Service Contract?

  • A contract purchased to protect a vehicle against the unexpected costs of breakdowns, for a specific period of time.
  • Allows repairs to be made in accordance with the level of coverage you purchase.
  • Ensures your vehicle is always in the best mechanical condition.

Why purchase an Extended Warranty / Service Contract?

  • Peace of mind
  • Allows repairs to be made when you need them
  • Most include a Free Rental Car if your car is in the shop for covered repairs
  • Protects you against the rising costs of repairs
  • Added resale value- most contracts are transferable upon sale


What doesn’t make sense is to pay the dealer a huge profit for simply printing the contract. For example a 6 year / 100,000 mile service contract on a typical midsize sedan might cost the dealer about $800, but they turn around and sell it to the consumer for $1200! A lot of dealerships are setting up their own warranty companies. So when your car does need a repair, guess who has to approve the claim - THE DEALER! Don’t buy a warranty or service contract from the dealer.

We recommend WarrantyDirect.com. They offer service contracts to meet your driving habits. These contracts are honored at the repair facility of your choice and could end up saving you a lot of money in unexpected repair bills.

What to look for when purchasing an Extended Warranty

  • True Bumper-to-Bumper Coverage- if the plan lists the items that are covered, it is Not a bumper-to-bumper plan. By definition, a bumper to bumper plan is exclusionary, that is, it will only list the few components that are not covered. Typically these include cosmetic and maintenance items.
  • Wear and Tear Protection- This means that you are covered for parts that break as well as those that wear out. All covered parts in a policy should include a “wear and tear” provision. A lot of plans have wear and tear exclusions, such as struts, piston rings, valves or other expensive components that wear out and will not be covered. Beware of “Mechanical Breakdown” plans, they often have wear-and-tear exclusions, thus offering you less coverage.
  • Overheating- Look for a plan that does not exclude damage due to overheating.
  • Roadside Assistance- You want a plan that offers a Free nationwide Roadside Assistance plan. You want to be covered per occurrence. Not an out of pocket reimbursement plan, that is tied to only covered repairs. A good policy includes:
  • Emergency Road Service* Towing * Mechanical First Aid * Emergency Tire Service * Battery Assistance * Gasoline Delivery * Fluid Delivery * Emergency Lock-out Service * Nationwide Coverage * Toll Free 800 Number * 24 Hours a Day / 365 Days a Year
  • Car Rental - Should your vehicle have to remain overnight for a covered repair.
  • Trip Interruption - Should your vehicle become disabled more than 100 miles away from home and the repair is covered under your contract, reimbursement for lodging and meals.
  • Nationwide Protection - Repairs can be made at any repair facility in the US or Canada.
  • Choice of Deductibles- Most automobile plans offer $0, $50 and $100 deductible options.
  • Renewals - A plan that may be renewed for continuous one-year terms for as long as you own your vehicle.
  • Transferable - The ability to transfer your coverage when you sell your vehicle, for a modest fee, which will increase your vehicle’s resale value.
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