Deciding whether or not to purchase an extended warranty can be difficult. Some financial experts recommend them while others do not. In the end, you may decide based on whether or not you can afford a warranty that provides the coverage you need. Likewise, you may consider the likelihood that your vehicle will need repairs that cost more than the extended auto warranty before it expires. Additionally, you may consider the availability of funds to pay for repairs in the event that you do not purchase an extended warranty and your car needs major repairs.
The amount of money you have available to pay for an extended warranty may play a major role in your decision-making process. You will likely want an extended auto warranty that covers as many repairs as possible and offers a low deductible. Often, these warranties are considered premium extended warranties, and they are typically more expensive than those that cover less or charge a higher deductible. Many extended auto warranty companies do offer financing, so you may secure the warranty you desire even if you do not have the cash or credit available to pay for it. It’s important to keep in mind, however, that financing an extended warranty ultimately makes it more expensive because you typically have to pay interest on it.
The condition of your vehicle may also influence your decision of whether or not you should purchase an extended auto warranty. If your car is in excellent condition, you may decide to place the money you would spend on a warranty in a high-yield savings account. On the off chance that your car does need a major repair, you would have a lump sum in your account to use for it. If your car does not need a major repair for years, the money in the account could grow, giving you even more money to spend on car repairs. The potential problem with taking this approach, however, is the fact that you may need a repair that costs far more than an extended auto warranty or the money you save by choosing not to purchase one.
Many people feel less than enthusiastic about purchasing extended warranties because their money is basically lost if their cars do not need major, covered repairs during the warranty period. If you do not have a ready source of money to pay for unexpected car repairs, however, an extended auto warranty may give you peace of mind. You may consider using credit cards or loan money to finance repairs, but the finance charges may make this a less attractive option.