Used Car Extended Warranty - Do or Don't?

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What is covered?

The coverage varies by the company offering the warranty. Some cover just the powertrain and others cover the complete car. You need to read thoroughly what is covered because they get very detailed in what they will pay for. Sometimes fluids replacement during the repairs are not covered by a warranty. If they do not list all the items covered then do not accept the warranty.

How much can I save?

The amount you will save will vary based on coverage and deductible.  The more coverage you want the more you will pay upfront for the warranty. However, Over half of the buyers did not use their warranties. Most warranty buyers will never use the warranty because they won't have the car long enough to use the warranty or repairs will not be covered in the warranty terms. Most warranties end in a net loss because the repair cost is less than the cost of the warranty.

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What are the alternatives?

The best alternative is to buy a car with a high-reliability rating so the repairs are not required. You can find these ratings online at several outlets. Secondly, you can just save a repair fund to pay for these items out of pocket, then you do not risk overpaying for something you will not use. 


Be sure to read all the terms of the warranty. Be aware of scams out there where people cold-call you and try to sell you a warranty.  Check that the company is legit if you choose to get one. Dealers or original manufacturers are the best places to get the warranties. 

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