Are extended car warranties really worth it?

Are extended warranties worth the money?

Okay, so you’ve picked the car of your dreams (or at least, one that fits neatly into your budget), you’ve figured out the best negotiation techniques, and now you’re down at the card yard looking to pick up those hot new wheels for summer.

Then the dealer throws in a last spar, “would you like an extended warranty with that?”

Okay, so they might not phrase it exactly like an extra on your takeaway order, but let’s investigate extended car warranties and how helpful they really are, or possibly aren’t!

What is an extended warranty?

Basically, an extended warranty gives you financial cover in case of any unforeseeable defects or costs that arise from repairing electrical or mechanical faults during the specified term.

Now, we’ll start by saying that if you’re under the impression that the need for an extended warranty is about as real as a flying pig, we hear you.

However, there is still a case to be made for these extended warranties, which begin when the original guarantee expires.

They can provide peace of mind in case of any future misfortune with the vehicle, but to be fair, this really depends on the length of your car’s original warranty and how long you plan to keep it.

When should I consider an extended warranty?

No disrespect to any car dealers out there, but we are obliged to say that it’s important to make sure you feel confident with who you’re buying the car from.

If you’re in the second-hand car market, you’re likely to get a three month warranty, and in this case, the reasons why you would invest in an extended warranty are fairly obvious.

But, think again.

In our estimation, extended warranties are not usually worth the money.

When you buy a car from a dealer, you are protected by the Consumer Guarantees Act (CGA). This implies that the vehicle must be of acceptable quality and capable of lasting a reasonable period of time.

There is no defined time limit for returning a malfunctioning car, despite what some dealers may claim. Even if you didn’t buy an extended warranty, you have the right to seek a remedy from the dealer if there is a problem with the car that you didn’t cause.

Extended warranties v The Consumer Guarantees Act

For some people, the inconvenience of getting real repairs done under the Consumer Guarantees Act is just way too much to bear, therefore extended warranties offer an appealing alternative.

Bear in mind though, some extended warranty contracts have significant limits as to what they cover, making them a poor substitute for the Act.

Damage incurred during delivery, for example, and total loss of the product owing to non-availability of parts may be excluded from the contract. Some warranties do not cover the cost of shipping or travel time for a genuine repair. Not much help if you’re in either of these situations – like that new BMW you’ve had your eye on!

It’s crucial to note: nothing in the warranty contract can limit your rights under the Consumer Guarantees Act, therefore you can contest the contract if you have a broken device but aren’t receiving reimbursement due to a restrictive condition in the warranty contract.

Read the fine print!

Cancelling the warranty in the event that the automobile is stolen or, all going according to plan, you sell it, differs from one supplier to the next, so make sure you understand the restrictions. In an ideal world, you’ll make back enough money to pay for the extended warranty when you sell the vehicle.

The trick here, like with any insurance product, is to understand exactly “what’s inside the box”. Get everything in black and white and spend some time figuring out what’s in, what’s out, and anything else you need to know. You might be surprised!

Don’t let the dealer bait you into purchasing an extended warranty without doing your research. They aren’t insurers, they’re salespeople, and you know they aren’t doing it out of the goodness of their hearts — there’s sure to be a tidy commission built in. Not for you, though!

Remember that if you say no to the dealer now, you may always say yes later to another insurance package. The same applies however!