Have you bought a technology product lately and weren’t asked: “Would you like an extended warranty?” Probably not, extended warranties seem to be offered everywhere today. And most people turn them down because the product they are buying just isn’t that valuable in their eyes. The question is: what about cars? Should you buy an extended warranty next time you buy a car?
Warranties buy you “peace of mind”
Let’s face it, owning a car when it’s “under factory warranty” is nice. No matter what comes up, you can have your local dealer take a look at it, and if something does need repairing, chances are the factory warranty will cover it for you. Manufacturers know that this peace of mind is great for car owners because it soothes the unknown – the unknown of a budget-busting repair bill. As Mr. Ed (Phoenix, AZ) says: “It allows people to sleep at night.”
Here’s a sobering financial fact: The AAA says the average American household spends $3,269 on car maintenance per year. That seems like a lot doesn’t it? Well, cars today are not the simple machines they used to be. New vehicles are loaded with complex technology and tons of electronics. Because of this, not only have cost of repairs skyrocketed, so has the cost of just diagnosing the issue. According to AAA, the average cost to repair an air conditioning system for example is $950 these days. Over the next five years repair costs are going to increase about 12% per year. That $950 air conditioner repair today could cost as much as $1,600 to repair just a few years from now. Ouch!
The manufacturer’s factory warranty typically covers a vehicle for a period of time that is shorter than the time you will own your vehicle. Extended warranties make it longer. For example, you can add on a set number of miles or a set number of years, like 30,000 miles or 3 years. You won’t need to worry about what things will cost because everything is taken care of. That’s the great part of having an extended warranty.
Should you buy one?
It is not uncommon for people to play down extended warranties. They claim that today’s cars rarely need service until they accumulate tons of miles and get pretty old. During this time, the manufacturer’s warranty will cover you just fine.
Well, there is some truth to this, but, if something does happen, and extended warranty can save your neck when the manufacturer’s warranty runs out. Here’s the bottom line: you don’t need an extended warranty, nobody has to have one, but does it buy you peace of mind? If it does, then it’s worth what you pay for it. As Mr. Ed of Phoenix said: being able to sleep at night is a nice feeling.