Whether it’s Future Shop, Sears or your local appliance store: everywhere is offering extended warranties. When purchasing a warranty for a washer, dryer or a new computer it is a fairly easy decision. Is $50-$200 extra worth the peace of mind for another year? For the majority of buyers, it’s a quick response: usually based on the cost of the warranty. Sadly, this is also how quickly a decision is made for extended warranty on a vehicle. When the cost of a warranty can range anywhere from $700-$3000, the buyer often quickly responds no. Don’t be this buyer! Extended warranty is not for everyone. However, having the additional coverage provides peace of mind and makes financial sense for a lot of consumers.
The Standard Warranty
The first step is to understand what is covered under the vehicle’s standard warranty: which will vary from manufacturer to manufacturer. On average, most will cover any potential defect in the way that the vehicle functions. Often times, these repairs are completed prior to a problem occurring in your specific vehicle. These recalls are repaired as quickly as possible.
The times where your warranty may come into question, is when a unique problem occurs to your vehicle. In these conditions, the service department in your dealership will thoroughly investigate the vehicle and make a request to the manufacturer for warranty coverage. Depending on the circumstance, warranty may or may not be approved. Protect yourself by becoming informed on the conditions that your vehicle needs to meet in order for the warranty to remain valid.
Did you know?
- The warranty in a cd player may become null and void if the manufacturer discovers that copied discs were played in the machine.
- Maintenance needs to be maintained at a factory authorized service centre in order for the warranty to be valid.
- Repairs may not be covered if a modification has been done on the vehicle: for example installing an after- market part.
The manufacturer’s website will usually detail the warranty coverage that they have for their vehicles. However do not use this as your only reference for understanding the company’s warranty. A website is used by the consumer to obtain information but the manufacturer will use it as a marketing and advertizing tool. Each website will highlight the benefits of their warranty over other manufacturer’s warranty. Be cautious, although the warranty may sound great on the website you do not know the fine points of what is covered.
For example: The Volkswagen website indicates the following information for their warranty coverage:
1) Basic Limited Warranty: This warranty will apply for 4 years or 50,000 miles whichever comes first. However, the warranty is limited and wear and tear items and adjustments are excluded after the initial 12 months, or 12000 miles.
2) Power Train Limited Warranty: 5 years/60000 miles.
3) Corrosion Perforation: 12 year, unlimited distance Limited Warranty against Corrosion Perforation.
The website only gives a bird’s eye view of what is covered in the warranty. Here are some questions that are left unanswered:
1) What does basic limited warranty mean to Volkswagen?
2) What is considered a wear and tear item?
3) What does the warranty define as power train? Does it cover the whole transmission or only certain parts? Are both parts and labour included?
4) Does the warranty cover the entire repair procedure including: Labour for inspection, dissembling the parts, Analysis, repair and re-installation.
5) 12 year seems an excellent time period for corrosion perforation. However, what do they mean by the words “limited” warranty?
In order to fully understand the warranty, you need to read it. Reading the warranty is critical before making the decision on whether you need an extended warranty.
Some factors that come into play for an extended warranty:
1) Does the term of the limited warranty cover the term of your contract? If not, you may want to opt for an extended warranty to cover that additional time period.
2) Some extended warranties have bonuses such as coupons to complete maintenance and services. If this is the case, find out the exact value for the services that are included.
3) The extended warranty may have an extended area of where they permit both your service and repairs to be completed.
4) The extended warranty may include Road Side Assistance and a rental car while your vehicle is being repaired. This will save you time and money.
5) The extended warranty may cover items that are seen as normal wear and tear.
Basically extended warranty will only make sense if the warranty covers any potential gaps and risks that your standard warranty leaves open. You do not need an extended warranty that covers the exact items and terms that your standard warranty does.
Before you decide to purchase that extended warranty there are a few more things you need to know. First of all, there are several companies that offer extended warranty: review the terms and conditions as carefully as you would review any contract.
Research the company:
Is the company well established? Find out how long the company has been in existence, if they are only on the web and how many plans that they have sold. You also want to research the procedure for making a claim. When is the claim resolved? What are the hours of operation? Is there a limit to the amount of claims that you can place? How can you contact the company if you have a question or concern? What is the cancellation policy for the warranty and finally can the warranty be transferred?
The Better Business Bureau or Web Assured should be able to provide you with information on the company that you are researching. If you are unable to find any information on the company, or can only find reviews on the company’s website, be wary.
Don’t be persuaded by a low price:
When looking at extended warranty do not go for the lowest priced product on the market. Often the lower priced companies are not insured and pay their claims from the income that they generate from other consumers. Learn about how the company pays for their claims. A company that is self-funded is much more likely to go bankrupt than a company that is fully insured.
Purchasing extended warranty should be an individual decision. Take your time to read both your standard warranty and extended warranty contract before making the final decision. An extended warranty should provide you peace of mind and make financial sense. However there are some situations: a short term lease agreement or by purchasing a warranty from a self financed company, where you will simply be wasting your money.
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