1. Decide Whether You Really Need It
Most manufacturers offer at least 3-year/36,000-mile bumper-to-bumper protection on their new products. In addition, many offer extended warranty coverage on engine and powertrain components and limited warranties on certified used cars. In most cases, these plans offer consumers excellent protection. But if you drive more than 12,000 miles per year or plan to keep your vehicle for a long time, then an extended service plan might offer the kind of security you are looking for.
According to Ann Tomlanovich at DaimlerChrysler, "many consumers choose to purchase extended bumper-to-bumper warranties to match Dodge's free 7-year/70,000-mile extended warranty plan. This guarantees that consumers won't have to pay for repairs for at least seven years or 70,000 miles." Tomlanovich also went on to state that roughly 30 percent of consumers are purchasing extended warranties-up considerably from past years.
Keep in mind that it is less expensive to purchase the plan while the vehicle is still covered by the manufacturer's warranty. If you wait for the bumper-to-bumper warranty to expire before looking into and extended plan, then you will pay considerably more. Most of these plans are self funded and insured, so the earlier you pay, the lower your rate.
If you think of an extended warranty as a security blanket then you might not mind paying money up front to avoid a large repair bill in the future. Consumers also need to look into the reliability history of their automobile. Some models with higher-than-average repair histories might necessitate an extended warranty. Also, consider the cost of parts. Many domestic models have repair costs that are half that of imported models, making an extended warranty appealing to owners of foreign cars.