Warranty extension and contracts - perfect protection at all times (2024)

FAQs

Is a service contract better than an extended warranty? ›

The main difference is that warranties are included in the purchase price and service contracts cost extra. Service contracts, also known as extended-warranties, can vary greatly and may not be worth the extra money.

A manufacturer's warranty generally covers manufacturer defects or failures for a period of time after purchase and is automatically included when you purchase the vehicle. Extended warranties are an optional add-on product that covers defects or failures that are not covered by the manufacturers' warranty.

One important area in which an extended warranty differs from a vehicle service contract is what it covers. VSCs cover routine maintenance services such as tire rotations or oil changes. Extended warranties cover the costs of repairs in the event of a breakdown, which are often significantly more expensive.

Extended warranties also won't pay for repairs in the event of an accident, theft, vandalism or fire. These are all issues that can be covered by your car insurance company depending on the level of coverage you carry.

Cons of an extended warranty

Added cost: Extended car warranties come at a price. Limited coverage: Extended warranties don't cover all types of damage, nor do they always cover all of your car's components.

Like most warranties, extended warranties and vehicle service contracts don't cover routine maintenance, wear items such as tires, brakes or wiper blades, collision damage or damage resulting from lack of maintenance or abuse. You should not expect heavily modified vehicles to be covered.

We ranked Endurance as the best car warranty company because it has six coverage options, long term limits and monthly costs that are cheaper than the industry average. Autopom is another top pick because of its customer reviews that speak highly of the company.

Like most insurance policies, an extended warranty is something you pay for in the hope that you'll never need to use it. For many owners, it's worth paying the price for peace of mind; even if your car is built by a brand renowned for its reliability, there's always a risk that something could go wrong.

Because dealerships profit more from aftermarket sales than from new car sales, they hope to be your primary source for an extended car warranty. Dealers want to make the car buying experience as easy and efficient as possible, so they will try to sell you a warranty based on convenience and accessibility.

Can you cancel your extended warranty and get your money back? ›

How to get your money back. You can cancel an extended warranty at any time and you'll get a prorated refund for the unused portion of your policy. If the warranty was included in your loan, your car payment won't drop, but you may pay off the car sooner after the refund is deducted from your balance.

Extended Warranty Statistics

Over 86 percent bought their service contract when they bought the car. Approximately 37 percent of car owners have an active extended warranty and only one in ten have actually used it.

An extended warranty or service contract on your vehicle pays the costs of some repairs, above what the manufacturer's warranty covers or after the manufacturer's warranty ends. Extended warranties and vehicle service contracts typically exclude routine maintenance such as oil changes and tire replacement.

“Extended warranty” can be a confusing term, but actually refers to a service contract. A true warranty comes from the manufacturer WITH the purchase of your car, while an “extended warranty” or service contract is an extra protection that you can purchase for your vehicle that extends beyond the manufacturer warranty.

If you're hoping not to pay out of pocket for repairs in the event of a mechanical breakdown, an extended warranty could be worth it. Be completely honest about your willingness to pay for these repairs and then shop around from multiple warranty providers if you think that coverage is right for you.

The value of an extended warranty or service contract is only as good as the company that's responsible for coverage. Find out who is offering the extended warranty. It's not necessarily the manufacturer and might be a company you don't know. Find out how long the company has been in business.

A warranty is a guarantee on the good that comes as part of the sales contract, but contract law treats warranties as an additional form of contract that binds the selling party to undertake a certain action.

The purpose of a warranty is to provide a buyer with a remedy if statements made about the target company or business prove to be incorrect and result in the value of the shares (or business) acquired being lower than expected. Warranties in this respect act as a potential price adjustment mechanism.

If you have a car that's prone to mechanical breakdowns and high repair costs, an extended vehicle contract can help preserve your peace of mind. Extended warranty coverage can be especially useful if you have a used car, since high-mileage vehicles tend to need more repairs than new ones.