Extended Auto Warranty: a Welcome Add-on When Purchasing a New Car

An extended auto warranty can be defined as a contract that a dealership or warranty company offers to cover repairs under said contract. There are two types of extended auto warranties: bumper-to-bumper and powertrain.

When you walk into a dealership and decide on a specific car, regardless of whether you lease or buy it, the terms are agreed upon. The next step is that you are asked to step into the financial office wherein a discussion ensues regarding insurance and extended warranties.

It is at this point that you have the opportunity to ask many questions before you decide upon what type of warranty best meets your needs. While most dealerships may offer a manufacturers extended auto warranty, which most of the time is included in the price of the vehicle, there are others who may offer a warranty from another company. If this is the case, it is incumbent upon you to ask for the manufacturers warranty before signing on the dotted line.

Read the warranty contract carefully. The reason for this is that most of the auto coverage contracts are not regulated and thus you may find they are not as inclusive as they claim to be. There are auto extended warranties that may be limited to specific parts that break, or there may be warranties that are limited to parts that wear down. Determine what is covered first; then make an informed decision.

The powertrain warranty, for example, may be misleading in that it does not cover all of the major components of the car. It only refers to those parts such as the transmission, engine, and the drivetrain.

Conversely, a bumper-to-bumper warranty covers all of the systems within the vehicle, however, there is a list of those parts which are not covered and it requires that you determine those parts not covered before you choose this extended auto warranty.

It is well-known that because extended auto warranty coverage is part of the overall price of the car, to suggest that there is a separate and distinct extended warranty is a misnomer. Depending upon the terms of the contract, however, there can be confusion as to the type of service offered, particularly through a dealership.

When a salesman at a dealership closes the deal and you are directed to another office wherein insurance and financing are discussed, the financial officer begins to ask questions; place a myriad of papers in front of you to sign; and not take the time to explain the details of the extended auto warranty.

While this is understandable, since you have just purchased or leased a new car, you may not be able to absorb the intricate details right away. Take some time before you discuss an extended auto warranty; research warranties beforehand and ask many questions.

The more knowledge you have, the less likely you will sign a contract that does not quite meet your needs.