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If you purchase an extended warranty from a dealership, you may assume you’ll be required to return to that location for future repair and maintenance needs. There are exceptions, but that’s usually not the case. As long as you are purchasing a third-party extended warranty, which is the most common type of extended warranty, rather than a dealership extended warranty, you are not required to return to the dealership for service.

Should you get an extended warranty on a new car?

What Is an Extended Warranty?

If you purchase a new car, it’s typically covered by a manufacturer’s bumper-to-bumper warranty. A manufacturer’s warranty is issued by the vehicle manufacturer and is included in the purchase price of your car. It covers your vehicle up to a certain number of years or miles, whichever comes first. An extended warranty on a new car is one you must purchase separately from the dealership or from a third-party provider. It becomes effective as soon as the manufacturer’s warranty expires.

There are pros and cons of extended warranties.

Pros and Cons of Extended Warranties

To buy or not to buy, that is the question. There is no one-size-fits-all answer. The best approach is to consider your finances, weigh the benefits and limitations of extended warranties, then make a decision you’re comfortable with.

Pro: Peace of Mind. One of the biggest sources of anxiety for car owners is facing an unanticipated and expensive, yet necessary, car repair. If you use an extended warranty service, you can breathe easier knowing that should your vehicle need a pricey repair, the warranty will cover a significant portion of the cost.

Pro: Better Resale Value. When you sell your car, potential buyers may assume if your car was covered with an extended warranty, you probably took care of it and had needed repairs performed promptly.

Pro: Some Policies Are Transferable. If you have plans to pass your car along to your child in the coming years, gifting a car with an extended warranty can benefit them. If that’s something you’re considering, make sure the warranty you purchase is transferable because not all are.

Con: Many Buyers Pay More for an Extended Warranty Than They Recoup. If you’re wondering, “Should I purchase an extended warranty?” Take some time to crunch the numbers. How much will the warranty cost you? What dollar amount of repairs will you need to incur before you recoup your investment? The fact is, many buyers of extended warranties end up paying more for the coverage than it saves them in repair costs. Just like flood or earthquake insurance on a home is a gamble, an extended warranty is also a gamble. There's always a possibility that you will pay for these insurance policies (or your extended warranty) and never end up using them. Why do people make these gambles? Peace of mind. There is also the possibility that a flood or earthquake will strike or that your older vehicle will experience a major system failure. Buyers of these insurance coverages or extended warranties will be protected.

Con: Not All Repair Shops Honor All Warranties. If you are contemplating purchasing an extended warranty on a new car you’re planning to buy from a dealership, you should be aware those warranties are typically aftermarket warranties. In other words, they’re issued by a third-party provider rather than the car manufacturer. That’s beneficial because it allows you to choose where to take your car for repairs and maintenance. However, not all repair shops accept extended warranties.

If your vehicle is covered by a third-party extended warranty, DeBoer's Auto Sales & Service in Hamburg will honor it. Contact us. We will perform necessary work for your car, and we’ll deal with the warranty company so you don’t have to.

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Bill DeBoer

Written by Bill DeBoer

William J. DeBoer (Bill Jr.) is Co-owner and Vice President at DeBoer’s Auto. As the company’s General Manager, Bill has been responsible for bringing innovations in daily operations to the full-service, high-tech auto repair facility for 20+ years. Passionate about computers from an early age, Bill’s interest in technology gravitated to cars while he was in college. By obtaining a Certificate in Automotive Technology followed by a B.S. in Business Management from Penn State, Bill was able to fuse his interests into a car technology specialization and join the family business shortly thereafter.