What to Know
- Extended warranties can also make a lot of money, for those who sell them.
Car buyers crave reliability. It’s a top concern of virtually every new and used car shopper, according to a Consumer Reports survey. But even a trustworthy brand isn’t always enough. Some people want extra protection, from an extended warranty.
“Completely about peace of mind. Not something I usually do on smaller purchases, but for the car, and having it be a pre-owned car, it seemed to make a lot of sense,” said Mike Sasloff, who purchased a pre-owned car based off its reliability but still paid for the extended warranty.
It may be years before Mike knows if he made the right call, financially. But auto experts at Consumer Reports say the odds are not in his favor.
“An extended warranty may give you peace of mind, but Consumer Reports has found that buyers aren’t always going to see a return on that investment,” said auto editor Jeff Bartlett.
Extended warranties can also make a lot of money, for those who sell them. The Better Business Bureau recently issued a warning to consumers after receiving hundreds of complaints about companies selling extended auto service contracts and suggests using extreme caution, when considering one.
“A better plan would be to take whatever money you would spend on an extended warranty, and instead put that in an emergency fund,” said Bartlett. “You’d have that money available if you need a repair, or you can put it towards your next car.”
But if, like Mike, you find comfort in an extended warranty, Consumer Reports urges you to read the fine print. Considering things like the length of the plan, the coverage limitations and of course, the price which can be negotiated just like the price of the car.