The following post is from Melissa Batai
Even if you buy a used car, you can expect to spend quite a bit out of pocket. In fact, for many, a car is their single greatest expense behind buying a house. So, when you’re sitting in a salesman’s office, listening to how much you’ll need to pay, and he offers an extended warranty, you may be tempted to say no. After all, most extended warranties aren’t cheap; in fact, they can add $2,000 or more onto the final price of the vehicle. However, buying an extended warranty is often a smart decision.
What Does an Extended Warranty Cover?
Most extended warranties don’t cover the cost of routine repairs. Instead, they cover major automobile failures. That’s what a manufacturer’s warranty does, but with an extended warranty, you’re protected for those failures that happen after the manufacturer’s warranty expires.
When You Should Opt Out of an Extended Warranty
If you’re able to set aside thousands of dollars for car repairs, then you likely don’t need an extended warranty. However, if a major car repair would cause you budgeting woes, buying an extended warranty is a smart decision.
In addition, if you’ve researched the vehicle model carefully and don’t see any major mechanical issue trends, then you may be able to pass on the extended warranty.
Our Experience with an Extended Warranty
In 2016, my husband and I bought a second car, a used 2013 Subaru Outback. We had been a one-car family for our entire 16 years of marriage, so this was a big purchase. The car was only three years old and had just 40,000 miles on it, so we felt confident in our decision. Since we were already spending a lot of money, the last thing I wanted to do was tack on an expensive extended warranty, but we decided to buy it. Am I ever glad we did!
Within months of buying the car, it started leaking oil—a lot of oil. We had to keep getting it serviced at the dealership before the dealership would admit there was a problem, but in the end, they replaced the engine free of charge, thanks to the warranty. We learned that leaking oil is a common problem with the 2013 Subaru Outback.
Remember You Can Negotiate
Just as you can negotiate the final price of the vehicle, you can also negotiate the price of the extended warranty. This is a little-known fact, so the dealer is probably assuming you don’t know this. Now that you do, make sure to always negotiate the price of the extended warranty.
If you can afford several thousand dollars’ worth of repairs if buying a used vehicle, then skip the extended warranty. However, if you want peace of mind and protection against major problems with your used car, buy the warranty, especially if you can negotiate the price down a bit.
My Question for You
If you buy used cars, do you also buy the extended warranty? If so, have you ever used it? Or do you consider extended warranties to be a waste of money?