Courtesy / Erik Mclean

The low-down on extended warranties

By AMA Staff

Do you need an extended warranty on your new vehicle? The short answer is: it depends. The important thing is to enter the conversation knowing the sales person will offer it, and understanding whether your needs make it a good investment or not.

“Just know it’s coming, so be prepared for the conversation when it does,” advises Ryan Peterson, manager of automotive services for the CAA Club Group. He’s well acquainted with the inner workings of car dealerships, having spent more than 20 years as an employee at various dealers in both service and management roles before joining CAA.

These days, drivers may be more inclined to consider the extended warranty—many people are keeping their vehicles longer, and with older vehicles comes fear of expensive repairs.

But when deciding whether to opt in, first make sure to consider that every new vehicle has a factory warranty included in the price. Extended warranties can provide longer-term coverage and can be optionally offered from the manufacturer or from third parties. However, be sure to read through that extended coverage carefully: for example, check if you need to have your vehicle regularly serviced, or serviced by the dealer, to meet the warranty requirements. Additionally, in some cases, the cost of making repairs as they are needed may not be equal to the price of the extended warranty.

So, what’s a car buyer to do? Peterson’s advice: “If you’re a person that’s fearful or worried about a big expensive repair, then maybe the mental calmness an extended warranty would bring is worth the money. Or, if you can’t afford that sudden, unexpected repair, then buy the factory extended warranty.” For everyone else, make sure to weigh out whether extended warranties are worth the cost.