Are Extended Warranties Worth It?
Statistically speaking, most extended warranties do not provide enough value to justify their cost. The numbers tell you that if you buy an extended plan, you are at risk of losing money. On average, most car buyers will end up paying more for their warranty then they would have for any car repairs. Of course, there have also been many other circumstances where the purchase of an extended warranty has saved the car owner thousands of dollars.
When evaluating the worth of an extended warranty, it really all boils down to your personal situation. Before making a decision, consider the following criteria:
- Economic Stability: If your car were to break down, would you be able to comfortably handle a fifteen hundred dollar repair? If the answer is yes, then you might be able to forgo the extended warranty. On the other hand, if you would have to consider financing in order to cover such a repair cost, an extended warranty may be the safest route.
- The length of Ownership: The benefits of an extended warranty will also depend on your car buying habits. If you are the kind of person who upgrades to a new car every three to five years, you will probably never reap the benefits of this extra coverage. However, if you plan to own your car for an extended period of time, the warranty may be a good option.
- The cost of Warranty: Some warranties are simply a bad value. They either do not offer an extended amount of coverage or are overpriced. The best advice is to really examine the costs of the warranty. If it seems overpriced, you should certainly avoid it.