My wife and I are expecting our fourth child and it was time to upgrade our vehicle to something a bit more sophisticated and roomy – and awesome – yes, we purchased a minivan. During the financing portion of purchasing the vehicle, we were presented with the option of buying an extended warranty on the vehicle since the factory warranty had expired. At first thought you think the dealership is trying to just suck more money out of you, but then you think about leaving the lot in a used vehicle and the transmission goes out and you wonder …
Should I Purchase an Extended Warranty On a Used Vehicle?
At first glance the added protection of covering your vehicle from bumper to bumper seems like a no-brainer, however, before you throw down the $2500 you need to make sure you know what you’re getting yourself into.
Extended warranties make money
Extended warranties are pushed to customers because they make money – plain and simple. There are scenarios where purchasing the product can be a great idea and end up saving you money, but there are other times where it is completely unnecessary and will just cost you more money than you needed to spend.
Every Situation is Different
Some vehicles may have thousands of miles of warranty left on them from the manufacturer, while others may only have a few thousand. Buying an extended warranty that you may not even need to use for 3-4 years might not be a great idea, where one you could use in a few months might make sense.
Consider the Cost
The warranty I purchased added $50/mo to my payment. I opted for this because the vehicle we purchased was highly electronic and repairs on this type of vehicle are expensive. When everything is controlled by a computer and electronic, your typical mechanic is not going to be able to work on your vehicle and you’ll need to take it into the dealer – this can increase the cost of repairs and could be a good reason to purchase the extended warranty. So my question was would I put in $2500 of repairs over 5 years? Maybe not, but if the power door quits working (which it did on my last vehicle) it is a $1500 repair – which is significant.
Dealership Repairs -vs- Your Local Mechanic
Like I mentioned above, depending on the type of vehicle, you may be forced to take it into the dealer for repairs. Sideways engines and computers make it very difficult for local guys to work on the big issues. Having a warranty on a specialized vehicle may make sense.