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Extend Warranties for Cars

Many people are quick to dismiss extended warranties. But not all extended warranties are built equal. When it comes to a car, they are some of the best financial security options you can buy. For just a few extra dollars a month, you are guarded from a shock to your wallet down the road, one often magnitudes larger than the initial cost.

That’s why when it comes to your car, you should spend more time thinking about an extended warranty.

Buckle up for a five-minute read. In this post, we’ll quickly examine the typical consumer warranties you’ll encounter, how car warranties are different, followed by four lesser known reasons why you might want to purchase an extended warranty for your next vehicle.

“I’ve Got Just One More Thing to Show You…”

Extended warranties get a bad rap. Often tacked onto the end of the buying process by a pushy salesperson, they can be a quick way to ratchet up your bill to more than you were planning on spending.

Their critics complain about their astronomical markups, their frequent exclusions, and the many questionable ways that retailers try to deny claims.

And you know what—they’re right!

Most extended warranties aren’t worth pursuing. Most of the time they aren’t worth the added cost.

Skip Paying More at the Store

If you paid $400 for a laptop that you expected to replace in a few years, why would you want to pay another $200 up front—half the cost of replacement—for a two- or three-year protection period when you could take your chances or pay $600 for a more reliable model instead?

If you bought a premium tennis racket, why would you pay an extra $100 to extend its one-year basic warranty when you could take $50 instead and place it in an interest-generating savings account to use for a future re-stringing or down payment on your next racket?

If you purchased a new dishwasher, why would you make a forced decision to buy an extended warranty if you didn’t have the chance to shop around and compare rates? When do you ever tolerate forced decisions outside of buying negotiations?

What a Racket!

Cars Are Different

Not all warranties are created equal.

If your personal laptop fails, you use your work computer. If your tennis racket breaks, you quit playing tennis for a while. If your dishwasher goes bust, you wash your pots and plates by hand like you did when you first moved out of the house.

But if your car breaks down, you suffer—you have to take a cab to go pick up groceries, you miss out on engagements and events across town, your mobility is limited to the bus schedule, and you may even miss out on earning your income if you rely on your car to get to work.

Why You Might Want to Consider an Extended Warranty

We can’t stress enough that every situation is a bit different. It is still most important to select a vehicle like Ford which consumer reports rate with a high level of reliability and low cost of ownership. Extended warrantees are the next part of the process.

Here are some of the lesser known reasons why extended warranties pay off, without all the scare tactics and doomsday prophecies.

Securing against the cost of future repairs

Unlike a lot of other consumer goods, automotive repair bills can be pricy to the point of being debilitating.

What happened the last time you got a pay raise? Did you carry on at the same level of spending as you did before the income bump? Or did you loosen your purse strings in proportion to the increase of your disposable income?

Social scientists use the term “risk homeostasis” to describe the stable, long-term relationship that people have with their own risk tolerance. If you are comfortable with a balance of $1,000 in your bank account, you will carry on the same savings patterns even as your income increases. The cushion remain constant, but the reaction time changes. What’s the big deal if you spend more money each month if you still keep that comfortable bank balance? Indulge yourself on occasion and you can always rebuild that cushion—and even faster now.

It works for cars, too. If you get new brakes that allow you to stop much faster, studies find you will eventually change your driving habits so that your reaction time matches what it was with your less responsive brakes. Instead of leaving big gaps between you and the vehicle ahead of you, you reduce the distance because you can now brake more effectively. You re-enter the same level of risk homeostasis. Hockey players start wearing protective gear and helmets, roughness rises to retain the previous level of abuse. You get the idea.

The problem with unforeseen car breakdowns is that they can wipe out your rainy day fund in an instant. Extended warranties secure you against these emergencies by splitting up the total cost over time in manageable little chunks that are virtually unnoticeable in your day-to-day life.

By adding in a couple of extra dollars to each car payment, you not only protect your vehicle and bank account against unexpected repairs without any noticeable lifestyle adjustment, but you also guard yourself against the volatility of changing service costs and parts expenses, especially as parts for older vehicles become more rare and expensive.

Save yourself the cost shock

Buying sooner means lower rates

Extended warranties are meant to, well, extend the warranties beyond their initial term periods. So logically, you could purchase and extended warranty on Day 1 when you buy your vehicle, or you could wait until the day before the coverage expires to extend it. You’re paying for the same protection over the same interval.

However, when you buy your warranty affects how much it will cost.

Think about it: If you were buying life insurance, would it cost less, month to month, when you are in your 20s with no signs of ill health, or when you’re nearing the age of retirement and your body shows visible signs of wear and tear and new risk factors. The first case, obviously.

Extended warranties work in the same manner. They are more affordable when you buy them sooner than later, even if they cover the same terms. The savvy buyer gets his or her car warranty sooner.

Warranty holders are more likely to service their vehicles

Like a bad knee ligament that is functional but supplies you with chronic pain and inflammation over the years, sometimes cars suffer from chronic problems that are not in immediate need of repair. But, sure enough, over time the damage escalates.

A long list of consumer reports finds that people who hold extended warranties are more likely to bring their vehicles in for repair services when needed. This could be due to a number of reasons: maybe warranty buyers are the more diligent types to begin with? Maybe they take satisfaction in using a valuable service they paid a small premium to afford?

Just as likely, they know that they won’t be saddled with a big bill. So like how Canadians with universal health care coverage get the treatment they need, when it is relatively inexpensive and limits the escalation of the problem, warranty holders aren’t constantly caught between the horns of a bull: addressing an expensive concern that might be benign, or remaining in denial and risking an even costlier repair down the road.

Another side perk: a comprehensive record of regular maintenance and repairs often builds trust for the owner and helps them to re-sell their vehicles for higher prices down the line.

Use your warranty

Warranties put the mind at peace

The Tell-Tale Heart. Crime and Punishment. That episode of The Simpsons where Bart convinces the citizens of Springfield that an orphan boy was trapped down a well.

Culture is full of examples of people tormented by something they got away with. Why? Because it’s a universal desire to have your mind to be at peace.

This point might not apply to everyone, but if you are the type of person to ruminate in worry for passing up a warranty plan, then you already know who you are. For just a couple more dollars each car payment, isn’t it better to feel calm and relaxed instead of feeling naked and exposed to risk?

This is a consideration that falls on the intangible side of the ledger. Sometimes you need to treat yourself to a few years of relaxed and robust driving, ridding yourself of those back-of-mind worries that slowly fatigue you over time.

Safe driving ahead

Make the Decision That Is Best for You

Is purchasing an extended warranty on a car the right move for everyone? No.

What’s important is whether it’s the right thing for you.

Consider how long you’ll own the vehicle. What kind of warranty coverage is already provided by the dealer?

Case in point: Through the Driving Change Automotive Group, every single new vehicle and most pre-owned models come with a Lifetime Powertrain Warranty. So long as you continue to come to us for service, we’ll cover all unexpected repairs needed for your powertrain caused by manufacturer defects.

We also have a Gold, Silver, or Bronze warranty package included at no extra cost on all used vehicles.

What does this mean? It means that depending on your driving habits, your needs, and your risk tolerance, chances are there is an extended warranty package available that covers what you need, and not what you don’t.

If you are thinking of getting an extended warranty for your vehicle but are unsure about what package is best for you, let one of our warranty advisors help you discover your ideal options.


Join the Discussion

Have you ever purchased an extended warranty on a vehicle or any other consumer good? Tell us about it!

  • How did the process go?
  • Did the coverage come in handy?
  • What advice would you recommend for people considering an extended warranty?


One Response to “Be Smart about It: Why You Should Spend More Time Thinking about an Extended Warranty”

  1. johan@AMT Warranty

    If you are worried about extreme out-of-pocket expenses from repair bills for old cars, I recommend you buy the manufacturer’s own extended warranty. Do not buy one from the dealer, though, because those are often third party too. Be sure it is the manufacturer’s own.



  1.  Used Car Buyer's Guide: Remaining Warranty Coverage | Driving Change Automotive Group Blog - Auto News, Service Tips, Truck Tricks and New Car Reviews

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