Buying Extended Warranty On New Car Link

If you roll the cost of the warranty into your auto loan, you aren't just paying the $1,500 to $3,000 sticker price; you are also paying interest on that amount for years, significantly increasing the total cost. When It Might Be Worth It

Dealerships push these contracts because they are high-profit items, often with markups of 30% to 50%. buying extended warranty on new car

It is important to clarify that an extended warranty is not actually a warranty. A true warranty is included in the price of the product; an extended "warranty" is a separate insurance policy you buy to cover potential future repairs. Most new cars already come with a manufacturer’s bumper-to-bumper warranty (often 3 years or 36,000 miles) and a longer powertrain warranty. Purchasing an extension on day one often means you are paying for coverage that overlaps with protection you already have for free. The Financial Reality If you roll the cost of the warranty

Despite the odds, there are scenarios where a contract makes sense: A true warranty is included in the price

When you purchase a new vehicle, the finance office will almost certainly offer you an extended warranty. While these plans—technically called "vehicle service contracts"—promise peace of mind, they are one of the most debated financial products in the automotive world. For most drivers, an extended warranty is a poor investment, yet for a specific subset of owners, it can serve as a vital hedge against catastrophic repair costs. The Illusion of "Warranty"

Surveys by Consumer Reports have shown that more than half of owners with these plans paid more for the coverage than they ever received in repair benefits.