There is always debate surrounding vehicle service plans. Some people swear by them, while others swear because they have them. Is an extended vehicle service plan a good choice? The truth is it’s a very open question, so let me guide you through the things you need to consider. Taking all the necessary factors into account will help you make the right choice regarding this important decision.
What is an extended service warranty?
An extended warranty is a service that you pay for that provides ‘peace-of-mind’ when it comes to costly car repairs. Extended car service plans provide coverage for things that are normally not covered in your standard manufacturer’s warranty. Common things covered in an extended service plan are: exhausts, electrical systems, engine components and the air-conditioning. Additionally, these extended plans also provide 24-hour technical and roadside assistance.
This all sounds great, but have you even read the standard service plan? Because if you have, then you know that most of these things are covered anyway.
Are they really worth it?
Automotive analyst Mike Quincy states that extended service plans are generally not worth it. The extra cover is a waste of money and most times buyers spend more on it than they receive in repairs. In fact, most of the money that people spend on extended warranties goes straight out of the customer’s back pocket and directly into the dealership’s bank account.
Vehicles like Jaguar or Range Rover are repair-prone and repairs on these cars are not cheap. However, customers should keep an eye open when buying a brand that is notoriously unreliable. The bottom line is that if you buy a reliable vehicle, you will not need an extended plan. So keep this in mind when browsing for your next vehicle.
So what about used cars then?
When buying a second hand car, it is normal to want some kind of assurance that the car is not just going to implode after a week’s worth of driving. However, a Consumer Reports survey of 8 000 owners who bought five- and six-year-old vehicles that had been covered by extended service plans, stated that 42 percent of owners who took out extended warranty never used them. In most cases it was because the vehicle didn’t need repairs or the standard manufacturer’s warranty was sufficient to cover the expenses involved.
The bottom line is extended warranty plans are, in most cases, simply not necessary. They will cost you an arm and a leg, and then end up giving you little to no returns. Why don’t you rather save up that money and use it if the need ever arises for a repair not covered in the standard service plan? Otherwise you probably will end up simply pouring that money down the drain. So whether you are buying a new or second hand car, forget the extended warranty, but be sure to use a purchase price calculator to make sure you buy an affordable and reliable brand. That way you can have the peace of mind that you need, without blowing your budget.