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During the process of purchasing a new car, the dealer will offer you quite a few optional add-ons, including an extended warranty. The usefulness of these add-ons varies, but it’s almost always better to decline them, as dealers mark them up quite a bit.

This doesn’t mean that an extended warranty is a bad idea, but you should look at your options and consider your needs first so you don’t spend any more money than necessary.

Deciding If You Should Get an Extended Warranty

The first thing you need to figure out is if you even need an extended warranty. New cars include a manufacturer’s warranty, and these typically last for the first three years or 36,000 miles, whichever comes first. If you’re the type of person who gets a new car every few years, an extended warranty wouldn’t be worth it, because by the time it kicks in, you’ll probably be ready to sell the car.

Research the car that you plan on purchasing to check its reliability and average repair costs. This information is readily available online. Cars are becoming more reliable every year, which reduces the frequency of repairs, but the advanced technology means that the repairs you do need may cost more.

When to Buy an Extended Warranty

While a dealer will obviously want you to get an extended warranty when you purchase the car, you’re better off comparing your options. There’s no rule on when you need to purchase an extended warranty, so you could purchase one at any time, even waiting until your original manufacturer’s warranty expires.

The cost of the extended warranty will vary depending on when you get it, though. If you wait until the last minute, expect to pay more. It’s usually best to buy one during the first year that you own the car if you want to get the best deal.

Warranty Options

You have two options when it comes to extended warranties. There are extended warranties offered by the manufacturer and extended warranties available through third-party companies, which are called aftermarket warranties.

For the most comprehensive coverage, your best bet is an extended warranty through the manufacturer. It will cover almost any major service or repair the car could need and you can take your car to any authorized dealership. Manufacturers typically have plenty of authorized dealerships available where you can go for service, and the only thing you’ll need to pay on an approved repair is your deductible.

You’ll save money on the warranty if you go the aftermarket route, but you need to carefully inspect what it offers to make sure it will work for you. Authorized repair locations will likely be more limited, and you could need to pay for repairs out of pocket first before receiving reimbursement from your warranty provider later. Check the reviews of any warranty provider you’re considering. You don’t want to get a warranty, only to find that receiving reimbursement is a hassle.

If you’re thinking about going with a warranty offered by a dealer, find out if it’s an extension on the manufacturer’s warranty or if it’s a dealer warranty. With many dealer warranties, the only place you can go for service is the dealer. You don’t want to end up with a warranty that doesn’t cover you if you need a repair while out of town.

Making the Call

If a hefty car repair would be too much for your budget to handle or you just want the peace of mind that an extended warranty offers, it makes sense to purchase one. See how much an extended manufacturer’s warranty would cost first, as those are the best option. Remember that you have time to shop around and don’t need to make a warranty decision right away.

Contact different dealers to see what kind of deals they’ll offer you on an extended warranty. The price can be much different from one dealer to the next. You don’t need to limit yourself to dealers, either. Credit unions are another option, and they tend to be more reputable than many of the warranty providers currently on the market.