Auto warranties are like auto insurance contracts, they can be difficult to understand unless you know what to look for. But, with just a little knowledge of the critical parts of a warranty, you can make the right decision and secure the best auto warranty for your vehicle. I can help you shop for a warranty like a seasoned pro, like me.
All auto warranty contracts are divided into several sections and while the format may vary, they all contain the same information. If all the information isn't in the document, it's not likely a contract, but a sales brochure. Make sure you're reviewing the auto warranty contract.
Most auto warranty contacts will have at least the following sections: Definitions, Terms and Conditions, Coverage, Filing a Claim, Service Department Guidelines, Cancellation Procedure, and Exclusions.
Each section is important and you need to be able to determine if a section is favorable or not. After reviewing each section for the critical elements, you can make a decision with full confidence. Avoiding scams and getting the best auto warranty is doable if you are an educated shopper. With an understanding of auto warranty contracts, there's no reason to depend solely on what you're told by a salesman.
One of several sections of the auto warranty contract is the Definitions Section, which I'll discuss here.
In this section you'll find the term "failure" and/or "mechanical breakdown". Warranties providing less coverage only pay for mechanical breakdown . These extended auto warranties define mechanical breakdown as a defect in parts and workmanship of the manufacture's supplied part, or a defect that makes the part unable to perform the function for which it was designed. It's reasonable to believe that if a part was poorly manufactured, it will break within the first few years when the vehicle is still under the factory warranty. The broadest auto warranty coverage will also pay for a failure of a part. Parts needing replacement because they've worn out are covered if your extended auto warranty includes failure coverage. Usually defined as: "a failure will be deemed to have occurred when a covered part has worn beyond the manufacturer's tolerances". Mechanical breakdown extended warranties will not cover repairs needed because a part's performance has gradually deteriorated because of normal wear and tear, unless a mechanical breakdown has occurred first.
Companies that don't offer you an extended auto warranty that includes coverage for a failure are certainly not a major player and others only provide failure coverage to 50,000 miles on the odometer.
Considering as much as 25% of all repairs needed are because of wear-and-tear failures, this auto warranty coverage is important. Extended auto warranties without wear-and-tear coverage are often priced the same as those that include it, so be careful and know what you're getting.
Last year there were 37 new companies selling auto warranties and by the end of the year 28 were no longer in business. How do you protect yourself? First, make sure you are buying from a direct seller rather than a broker or car dealership. There's no reason to pay the increased price or assume the risk of a middleman when you can buy direct from the warranty company. Second, the length of time they've been selling warranties is important. I recommend at least 10 years. There are many things you can do to protect yourself and get the best car warranty, but it starts with these two things.
Let's face it, whenever you decide to purchase a new or pre-owned vehicle the last thing on your mind are repair costs. Your primary concern is ?how much is my new or pre-owned car, truck or van going to cost me each month?? It's a new vehicle, so why would I have repair costs? So, as an auto buyer you decide not to get warranty protection on your car, truck, van or SUV to stay within your monthly budget.
Well, consider this fact. The standard warranty on most new and pre-owned vehicles is 3 years or 36,000 miles (whichever comes first) and the average auto loan term is 66 months.
Those unexpected out of pocket repairs can cause undue stress to your checkbook and budget. By adding warranty protection to your monthly auto payment you can protect yourself from making monthly payments on a non-functioning or improperly functioning vehicle because you cannot afford to make repairs. Getting less than fair market value for your trade-in because your vehicle is non-functioning or improperly functioning. Getting behind on your monthly auto payments because of unexpected repair costs. Carrying over negative trade equity (being-upside down) to your next vehicle loan.
If your vehicle is worth less than the loan amount, you will have to add this amount to your next vehicle loan. What does this mean to you? Well consider this example.
Tim purchases a new Cavalier? in January of 2002 and decides against purchasing the warranty protection. In June 2005 Tim's engine failed and the repair estimate came to $3,350.00 because he had over 41,000 miles on the Cavalier? and he was over the 3 year 36,000 mile standard warranty. Tim didn't have the money so; he decided to trade it in as-is at the dealership where he originally purchased it for a brand new Chevy Cobalt?.
Kelly Blue Book shows that Tim's Cavalier? is worth $5,425.00 in ?Good? condition. However, because of the blown engine, Tim's trade-in is worth only $2,075.00 because of the necessary engine repairs. Tim's payoff amount for his existing loan on the Cavalier is $5,625.00.
The difference between what Tim's Cavalier? is worth and how much he owes on his existing loan is $3,550.00. Tim will now have to add this amount to the loan for his new Cobalt?. This is what is referred to as ?being upside down? or having ?negative trade equity?. Having warranty protection on the original loan could have saved Tim over $3,000 and prevented him from paying additional repair costs and adding additional cost to his new Chevy Cobalt? loan. Tim could be paying for this mistake for years to come because more time is needed to pay the negative equity that was added to his new Cobalt? loan.
Warranty protection plans can be added to your monthly note for less than $30.00 a month.
Both Tom Andrews & Tonyg are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Tom Andrews has sinced written about articles on various topics from Cars, Used Car. Tom Andrews is an expert on auto warranties with over 25 years experience with warranty and insurance contracts. Since retiring, he warns consumers about scams and helps them buy extended auto warranties. For more information, go to:. Tom Andrews's top article generates over 720 views. to your Favourites.
Tonyg has sinced written about articles on various topics from Cars, Insurance and Financial Planning. . Tonyg's top article generates over 5400 views. to your Favourites.