Car warranty: What you need to know

You've decided to take your tax return and make a big purchase: a new or used car. You've mentally prepared...

You've decided to take your tax return and make a big purchase: a new or used car. You've mentally prepared yourself for the inevitable haggling and are a veteran of beneficial negotiations. At this point, you're only concerned about one thing: whether or not to purchase an extended car warranty.

Extended warranties for new cars

When you're thinking of purchasing an extended warranty, keep in mind that they're extra income for dealerships. This is especially important to remember if you are buying a new car as you'll already have a factory warranty included in the price of your vehicle. The factory warranty covers most of the issues that an extended warranty will cover: the first 30,000 miles or so of your vehicle. This works out to about the first three to five years that you own your car. This means that purchasing an extended warranty on a new vehicle may be unnecessary for most new car buyers.

However, every car is different. If you're purchasing a vehicle that is expensive to maintain or is known to have mechanical problems shortly after its factory warranty expires, then go ahead and bite the bullet. Paying for the extended warranty on the front end will ultimately save you headaches and cash on the back end.

Extended warranties for used vehicles

Certified pre-owned vehicles are all the rage these days and with good reason. The thing to remember is that the definition of "certified" varies from dealership to dealership. For the most part, it's better to buy a certified pre-owned as opposed to other types of used vehicles, as they generally come with 100,000-mile factory warranties. Keep in mind that even though your car or truck is certified, that doesn't mean that you'll never have any problems with your vehicle. Certified pre-owned usually means that it has passed the dealer's in-house inspection process. There is, of course, an expectancy of performance with CPOs; however, purchasing an extended warranty in this instance is advisable.

Pros and cons of the extended warranty

In terms of both used and new vehicles, there are many pros to purchasing an extended car warranty. Two of the more recognized benefits include roadside assistance and covered repairs. Other benefits include warranty transferability, loaner vehicles during repairs and choosing your own mechanic.

Be aware of who is providing your warranty and what the warranty covers. Organizations that are certified by the Better Business Bureau are preferable to those that are not. Additionally, many warranties exclude some repairs, so read the fine print. Caps on price according to repair/part type are also important to know.

The biggest con to purchasing an extended warranty is usually cost. Always try to maximize value by comparing price versus included services.

You can visit one of your Atlanta-area car dealerships or mechanics for more information.

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