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What Is An Extended Warranty and Why Does It Matter?

When you buy a new vehicle, you’ll usually get a manufacturer’s warranty that will cover many things that could go wrong in the first few years. Virtually all car manufacturers offer a factory warranty on new vehicles. A factory warranty usually includes a new vehicle limited warranty, sometimes referred to as a bumper-to-bumper warranty. But if your car’s warranty has expired or you’re buying a used car that doesn’t come with a warranty, you’ll be responsible for those expenses.

Manufacturers, dealerships, and third-party providers often offer extended car warranties that you can purchase when you buy a new car. You can also purchase vehicle service contracts on used cars.

Do you know what your factory warranty coverage is?

Knowing what coverage major auto manufacturers offer under their factory warranty is critical. Whether it’s a bumper-to-bumper warranty, a powertrain warranty,  or emission warranty coverage, it’s important to know what’s covered on your make and model vehicle.

An extended warranty provides coverage after your factory warranty runs out. Extended warranties are not considered warranties under federal regulations and lack the legal protections of true warranties. They’re technically vehicle service contracts—agreements to repair a vehicle during a certain period.

You can buy extended warranties from auto dealers, vehicle manufacturers and independent companies.

Extended warranty coverage can vary widely.. There are two basic kinds of extended warranties:

  • Exclusionary extended warranties cover everything except the parts listed as specifically excluded.
  • Inclusionary warranties cover only the parts named in the contract.

Some extended warranties cover only the powertrain; others offer bumper-to-bumper coverage. They sometimes cover vehicle maintenance, such as oil changes.

Why Purchase an Extended Warranty?

Purchasing an extended warranty might be a good choice if:

  • You can’t afford a major car repair. 
  • You drive your cars into the ground. 
  • You’re a high-mileage driver. 

What’s  more, you want to know that you’re covered in case of emergency, you estimate that it will result in savings, or maybe you’re buying an older car that’s likely to need more repairs.

When in doubt, ask your dealership for their professional input. They’ll have additional insight on the car and the warranty’s specifics.

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