| |
|
 |
| |
Consider An Extra Warranty - August 5, 2006
Richard drives a four-year-old sedan that is recently out of warranty.
He has faithfully maintained his car since he's owned it and his repair costs have been minimal.
One day, Richard discovers a grinding noise in his transmission and brings the car to his new-car dealership. The diagnosis is not good: The transmission needs to be rebuilt or replaced, which will cost roughly $2,000, including parts and labour.
Richard tries to persuade his dealership and the manufacturer to underwrite the costs of these repairs, but his efforts are in vain because his car is technically out of warranty.
To avoid major repair bills after his standard vehicle warranty has expired, Richard could have purchased an extended warranty, sometimes referred to as an automotive service contract.
It's a type of insurance policy to protect car owners against costly repairs.
At most dealerships today, a representative will offer customers an opportunity to discuss extended warranties for their new or used car.
Listen to this person and learn. Make your own decision, but think long term. If you plan on keeping your vehicle for longer than the standard warranty, then an extended warranty may make good economic sense.
Extended warranties should not be confused with standard factory warranties, which are included in the cost of a new vehicle. Factory warranties guarantee the "bumper-to-bumper" mechanical operation of a car or truck for a specified period (usually three years or 60,000 kilometres).
For instance, if your brand new car develops a serious engine or transmission problem within the warranty period, the manufacturer will pay for repairs.
Factory warranties don't cover normal wear and tear items such as tires, brake pads and wiper blades. Nor should extended warranties be confused with certified pre-owned vehicle warranties. These are manufacturer-backed warranties on used vehicles, which must pass stringent inspections and meet certain kilometre restrictions, as determined by the maker.
An extended warranty, on the other hand, is an optional purchase that covers the cost of repairs after a factory warranty expires.
This service is offered by dealers, manufacturers and independent companies, and it can be purchased for most new or used vehicles.
Is an extended warranty worth the investment? In certain cases, yes.
It really depends on the type of vehicle you drive, the cost and length of the coverage, and how long you plan to drive your vehicle.
In Richard's case, an extended warranty would have been a wise investment as he planned on keeping his car for several years after the standard warranty expired.
Note that extended warranties are not created equal. Most companies offer different levels of protection based on the specific needs of the customer.
It's important to know what your driving habits are, how long you plan to keep the vehicle and how comfortable you are with the level of protection already covered on your vehicle.
What's the reliability of your model? Some cars are more reliable and less prone to breaking down than others. The cost of an extended warranty can range from a few hundred dollars to more than $3,000. Some contracts will cover only partial or replacement parts, depending on your car's mileage.
Bottom line: Extended service contracts can provide great protection and peace of mind, but it's important to understand what you're buying.
|
|
|
 |
|
|
| |
 |
|
Home Page
