A vehicle service contract, which is commonly known as an extended warranty for car owners, is an optional protection plan you can purchase to help cover repair costs. An extended vehicle warranty typically starts once the manufacturer's warranty expires, but in some cases, the two protection plans overlap.
What does an extended warranty do?
An extended warranty is actually an insurance policy on your vehicle, a safeguard against expensive, unforeseen repairs. It covers repairs for an agreed-upon period of time and miles. True warranties, though, are included in the price of the product.
Is an extended warranty a good idea?
For the vast majority of people, the answer is a big fat no. Even Consumer Reports(Opens in a new window) says it's "money down the drain." Here's the big secret: it typically doesn't cost that much to repair most items. The cost of a single repair is usually less than the cost of an extended warranty.
What's covered under extended car warranty?
What's covered under an extended car warranty depends on your specific warranty. In general, they can include the powertrain (engine, transmission, etc.), air conditioning, alternator, gaskets and seals, electrical components, safety restraints, and more.
What are the disadvantages of an extended warranty?
Con: They Are More Expensive When Purchased Later In addition, with a few miles on the odometer, you will command a top deal. For new cars, the service contract will not kick in for several years, usually near the time the original warranty expires.