Standard and Extended
In any discussion of automobile warranties, there are two separate subjects
that need to be addressed: First, the standard warranty that comes automatically with the purchase of any new and
most used cars, and second, extended warranties (or service contracts, as they are often called).
On new cars, factory warranties
have become much more standardized in the last few years. Prior to that time there was somewhat of a gap between
the coverage of the domestic makers (most of whom clung to 12 month/12,000 mile bumper to bumper coverage) and
the import manufacturers (notably the Japanese, with 36 month/36,000 mile bumper to bumper warranties fairly standard).
For the 1999 model year, the most common warranty among all car makers is now the 36 month/36,000 mile coverage.
In general, these warranties will cover the breakdown of any part that fails under normal usage (wear items such
as tires and batteries are normally excluded) . Both parts and labor costs will be covered, as long as the breakdown
is not a result of misuse, accident, or lack of maintenance.
Used car warranties
are a lot more variable. When you buy a car from a dealer, the standard warranty can vary all across the universe--from
"as is" (you don't have
a warranty) to 12 month/12,000 miles, covering many major components. Probably the most common used car warranty,
however, is a 3 month/3000 mile warranty that will cover only major drivetrain (the engine, transmission or transaxle,
and rear end) components. If you buy a late model car, there is the chance that you will "inherit" the
remainder of the new car factory warranty. Just remember that these warranties are all "either/or" meaning
that the warranty ends when either
the time or the mileage has been surpassed, whichever occurs first.
Car buyers always ask "should I buy an extended warranty?"
When asked that question, a lot of automotive advisors will respond with "never buy an extended warranty." That's bad advice. The value of an extended warranty
depends on two simple factors:
1) The price
that you can buy it for, and
2) The limits
of its coverage.
Blanket statements that advise never to buy an extended warranty should be kept there--under the blanket.
you were offered an extended warranty that covered every single item on the car for a full 5 years, and cost $50,
would it be a good buy? How about a warranty that only covered the windshield wiper motor, lasted but 1 year, and
cost $1000? Like the value of any purchase, its worth is relative to the price and the usage. In the example, the
truth lies somewhere between those two fictional scenarios. An extended warranty that offers good coverage at a
reasonable price is a good buy if you use it. One that offers limited coverage and costs and arm and a leg is a
bad buy, whether you use it or not.
Direct offers a plan that is definitely worth a look. By
selling Extended Warranties directly over the Internet (and eliminating dealer profit), they have been able to
cut costs back, which converts to savings of up to 60%. They also offer a free roadside assistance program and
you can have your car serviced anywhere in the United States. Find more information here.
Next section: Delivery