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How Much Should You Pay for an Extended Auto Warranty?

Tuesday, March 19th

How Much Should You Pay for an Extended Auto Warranty?

When purchasing a car, whether new or used, you will be faced with the decision of whether to purchase an extended auto warranty. If you've done your research and have decided buying an extended auto warranty is a purchase you want to make, now it's time to consider how much you should pay for that auto warranty.

The price of extended auto warranties can vary greatly. The price depends on a number of factors including the following. The amount of coverage you want in your policy will affect price. There are three tiers of coverage: The first level covers the power train. The second covers the power train plus several other components. The last offers the highest level and is referred to as comprehensive or bumper-to-bumper coverage, which includes electrical systems, which can be expensive repairs. Each of these levels will be at a different price point with comprehensive being the most expensive.

Another factor which determines price is the duration of the policy. Duration of the policy is usually quoted in terms of mileage or years. That is, you may purchase a policy that is good until 150,000 miles or 10 years.

Who sells the policy is another factor that can affect price. Both auto dealerships and third-party companies sell extended auto warranties. Auto dealerships may sell both the manufacturer's warranties and third-party policies.

When purchasing a policy from a dealership, whether it's a manufacturer's policy or a third-party policy, you have room to negotiate if you're purchasing a car at the same time. Dealerships may simply offer you whichever policy is most profitable for the dealership. Be prepared before you walk in. Make sure you have researched policies online and can tell the dealer the coverage, duration and how much you're willing to pay and see what he offers. If he thinks you'll walk away from the sale, he'll be more willing to negotiate the price of the extended warranty. Another negotiating point will be how you pay for the extended warranty. If you make the purchase when purchasing the car, you can negotiate rolling that cost into any financing rather than paying a lump sum charge.

You do not have to purchase an extended warranty at the time of your car purchase. Many policies can actually be purchased after the original manufacturer's warranty expires, however, there might be a penalty cost.

Regardless of when you purchase an extended auto warranty, go online and research different price options, policy coverage and duration before going to the dealer or talking with a third party company about purchasing an extended auto warranty. The more prepared you are, the more you can save.

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Canadian Car Warranty FAQ

There are lots of companies offering warranty coverage for your car. They work very similarly to health insurance: you'll pay more for higher coverage, some things are covered and some aren't, and your policy will have a time limit. You can shop around for auto warranty plans just like insurance, too: you don't have to go with the plans offered at the dealership.
That depends on your car and your coverage. On a new vehicle, you might pay $25/month for bumper-to-bumper coverage, but an older vehicle's premium could be three times that. You can usually pay in full or monthly, with no difference in total cost.
The cost of your auto warranty will never be cheaper than when your car is new. But, you'll want to read the terms of your plan very carefully. While warranty plans at the dealership usually start from the time the manufacturer's warranty runs out, third-party plans often start from the date you purchase them. That could mean you're paying twice for the same coverage.
Probably. Each provider sets the limit for coverage, but there are options for cars with up to 150,000 miles! Most auto warranty plans are available for cars that are 20 years old or newer.
YES! The most important part of choosing an auto warranty plan is knowing what's covered and what isn't! Even comprehensive plans don't cover items with normal wear-and-tear, like brake pads and tires. The most user-friendly plans usually give you a list of what isn't covered - and if it's not on that list, it's covered!
Sometimes, but it's usually limited to the first 30 days after the purchase date. Again, be sure to read the terms of your auto warranty plan very carefully, to avoid any unpleasant surprises when you go to use your policy for the first time.
Almost all plans let you use the mechanic of your choice. Some providers will reduce your deductible if you go to one of their network partners.
Despite all of the annoying spam phone calls you've gotten, desperately trying to contact you about the expiring warranty on your car, auto warranty plans are a real thing. And, when you choose a plan from a reputable provider, you can save thousands of dollars on car repairs.
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