Car shopping? Use the extended warranty to see the future
Shopping for a vehicle is exciting, but it’s also a huge undertaking. It’s one of the largest purchases most Canadians will make. And making sure that choice is the most cost-effective is one of the biggest challenges.
At some point in your car buying journey, you’ll narrow the choices down to two or three vehicles that are potentially ‘the one.” This is the time when automobile prices must become more specific. You’ll speak with a sales consultant and probably end up in the dealership’s finance office while you are making your final decisions. This is when you’ll get into more detail about extended warranty and possible protection plans.
Two types of extended warranties
There are two main types of extended warranties.
Third party extended warranty such as First Canadian Protection Plan, Global or IA-SAL. And a new car extended warranty that is backed by the manufacturer.
Extended warranties give valuable peace-of-mind. If you decide to purchase the warranty, you’ll know you are covered when the factory warranty expires. If anything goes wrong, you won’t have to dip in to your emergency fund. Having that extended warranty adds value to your vehicle, as well.
How to use the extended warranty as a fortune-telling tool
Even if you don’t plan to purchase the extended warranty, be sure to get its price along with the “out the door” price of the vehicle. Ask for a line-by-line breakdown of the total cost of the car, including that extended warranty.
Most people who are in the market for a vehicle don’t know that the cost of the extended warranty varies greatly depending on the brand of the car. The company (whether it’s the manufacturer or 3rd party) doesn’t want to lose money on extended warranty sales, so they price the warranty according to how many claims they’ve had in the past.
A brand that has struggled with breakdowns in the past will price the extended warranty higher than a brand that has fewer issues with mechanical failure in their vehicles. So even though you’re buying a reliable brand and think you won’t need extended warranty, you’ll still have the pleasure of achieving that peace of mind for a low cost.
Brands that cost more to service and maintain will also have extended warranties that are significantly more expensive than their lower-maintenance competitors.
It makes sense that a car with a history of reliability within the brand will have a lower extended warranty price.
If you want an extended warranty, keep these tips in mind
Extended warranties cost less when the car is newer and has fewer miles. If you are in the habit of driving your cars for many years, or if you know for sure that this particular vehicle is one you’ll keep for the long haul, you’ll get a better deal if you buy early.
Read the fine print
It’s boring, but the price you’ll pay for daydreaming while the finance manager is explaining the terms of your extended warranty could be high. Take some time to really understand the warranty. What is the deductible? What are the covered repairs? How do you file a claim? This is important information that will help you save thousands of dollars later if your car needs repairs.
Find out if the warranty is transferable
A transferable warranty will add value to your resale figure if you decide to part with the car during the coverage period. The finance manager can explain the details, and outline the benefits of a transferable warranty.
Understand what the warranty covers
There are many types of extended warranties. Rust protection, mechanical failure, routine maintenance, paint protection, and interior protection are some options. Choosing a warranty with your lifestyle and personal preferences in mind increases the chance that you’ll benefit from having it in place.