It’s vital to know your warranty options when buying a used car. Are there any restrictions or limits on its use? Is it offered at an attractive price? Second, you need to know the terms of the warranty itself. Are the terms of the extended warranty competitive with those of other dealers?
You don’t want to pay more than you have to or get stuck with an overly expensive extended warranty if something goes wrong later. Some points to note before negotiating extended warranties for used cars are as follows:
Know the Type of Warranty You’re Negotiating For
In most cases, you will choose from two types of policies — manufacturer’s warranty and third-part or aftermarket warranty. A manufacturer’s warranty is usually available in certified pre-owned cars, with a validity length stipulated in years or miles. Since it is direct coverage from the automaker, it is legitimate, and you are assured of getting original replacement parts if the car breaks down.
Auto manufacturer extended warranties come in two forms:
- Bumper to bumper coverage covers essential components like the brakes, fuel system, steering, airbags, and electrical parts.
- Powertrain coverage which protects against major mechanical failures in the engine, drivetrain, and transmission.
A third-party or aftermarket warranty extends protection beyond the expiry of the original manufacturer’s warranty. This coverage is cheaper, but you should sign up with a credible company to avoid scams. Read the contract thoroughly to understand what you’re getting into.
Avoid Signing for Multiple Policies at Once
Did you know that some car dealerships offer only certain types of extended warranties (e.g., to protect the engine only)? Many dealers for used cars Calgary will try to sell you more than one type of coverage; however, it’s usually best not to sign more than one policy at once (unless you really want all of them).
The Devil Is in the Details
When you buy an extended warranty for 1,000C$ on a used car with a 5-year/60,000-mile basic warranty, and you decide to put 500C$ into it, this would be the down payment. The remaining 500C$ will be rolled into your car’s financing plan.
The problem with a warranty included in the financing plan is that it accrues interest, so it becomes more expensive than buying it upfront. Shop around to see if there are low-interest financing options and whether you qualify for them. Sometimes, you can get zero interest, saving you the extra cost in the course of your loan term.
When it comes to aftermarket warranties, the rules are not always what they seem. For a long time, some car dealerships have used “extended warranty” to mean “protection” to consumers. But in reality, some of these covers do not transcend the coverage of their vehicle’s basic warranty.
Choose the Right Deductible
Deductibles can be anything between 0 and 250C$. When negotiating with the dealer, determine what suits your situation – an expensive plan with a low deductible or a cheaper plan with a higher deductible.
Suppose you buy an extended warranty at 1,000C$ with a 200C$ for every claim. Five claims over the warranty period would amount to 1,000C$, so the overall costs would be 2,000C$.
But if you pay for a 1,500C$ warranty with 100C$ in deductible per claim, five claims would result in 500C$ in deductibles and 2,000C$ as the overall cost. Remember that for third-party coverage, you might have to pay for repairs with your own money and seek compensation later.
An extended warranty is not a free insurance plan. It will cost you money, and the more time it covers, the more you will have to pay for it. To negotiate for a better deal, know what’s covered and what isn’t. Don’t forget to ask about deductibles and limitations.
Most importantly, get an estimate of the cost in advance so you can make an informed decision and see whether it’s worth it for your situation (and budget). Lastly, compare quotes from different companies and shop around until you find the best deal possible.
