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Should You Get an Extended Warranty?

When you're itching to drive away in that new car, it may be hard to resist dealership arguments to just wrap that extended warranty cost into your monthly payments. Since many auto makers now give automatic new-car warranties longer than the traditional three years or 36,000 miles, an extended warranty might not be necessary.

However, if you're among those who find the reassurance of an extended warranty worth the price, here's some advice on getting the best possible deal:

You don't have to buy right away

Review your current warranty. If you still have a manufacturer's warranty, you would be wasting your money by paying for double-coverage. You always can buy an extended warranty just before your original one expires.

Consider mechanical breakdown insurance

These contracts generally provide coverage up to six years or 100,000 miles and often cost about half what you might pay elsewhere. Click here for programs available from Global.

See who is behind the contract

Wherever you buy it, see what financial company backs your extended warranty.

Know what is NOT covered in your contract

Like regular new-car warranties, most extended service contracts exclude recurring maintenance items such as brake parts, windshield, headlights, light bulbs, and oil and air filters. Additionally, some potentially expensive repairs like power windows and seats sometimes are excluded.

Check the deductible

A deductible of $100 before coverage starts often will be required. This seems reasonable because you are trying to protect yourself against big bills.

Make sure you can transfer the contract

If you want to sell your vehicle later as a used car, an extended warranty that goes with it will enhance its value. Avoid nontransferable contracts.

Find out how repairs are paid for

Some insurance or financial companies will pay repair shops directly. With others, you pay up front and then collect from the service-contract company--often a slow process.

Remember you can negotiate the price

You negotiated hard to get the best price on your new car. You can do the same on the extended warranty--there's always room to haggle.

With everyone's participation in the planning, along with flexibility and sufficient distractions during the drive, you'll have trips to treasure.

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