Extended Warranties

Buying a new car involves making several decisions, some of which can be expensive. But just when you think you've picked the right make, model, color, and options and researched pricing, a prominent decision still remains: whether to buy an extended warranty or not. (Chrysler helped make the decision for its customers, unveiling a new 7-Year/70,000-Mile Limited Powertrain Warranty to motivate buyers to its dealerships.)


Extended warranties are available for both new and sometimes late-model used vehicles. These policies' value depends on numerous variables. We'll briefly sort through some of the major concerns here.

Beyond Basic These policies' value depends on numerous variables.
Anyone who buys a new vehicle will likely be offered an extended warranty during the paperwork portion of the purchase process. Ideally, your new-car research should anticipate this so you'll know 1) whether you want the warranty and 2) if so, the type of coverage and from whom.


Extended warranties aren't for everyone. First, consider how long you'll likely own the vehicle. If you're doing a 3-year lease, the regular manufacturer's warranty will likely cover the major parts, so the extended warranty might be a waste of money. Similarly, if you get a new car every three to five years, balance the cost of an out-of-warranty repair against the price of the extended coverage.


Which leads to the next topic: Research the reliability record of the vehicle you intend to purchase. For example, if the car has a history of transmission problems, then a single beyond-warranty major repair could exceed the cost of the extended coverage. On the other hand, models that have good reputations for enduring reliability might not need the extended coverage if they'll be traded in on a new car shortly after their basic warranty period expires. Several web sites list recall and service-bulletin information to help assess a given model's reliability.