Extended Auto Warranty - Tips and Tricks

1. Check If You Really Need an Extended Warranty

   An extended auto warranty contract is a powerful safety net which could save you thousands in car repair cost. However there are situations where an extended auto warranty is not needed and wouldn't protect you in any way. Know these cases and save your money on not buying what you don't need:

   • You bought a new car and don't plan to drive it for more than 3 years.
     Manufacturer's 3 years implied warranty covers most mechanical problems.
   • You plan to lease a new car for 3 years only and then get a new lease or just return a leased car back to the dealership.
     Some auto dealerships will try to sell you an extended warranty on a 3 year lease - don't buy it! It is a scam. All new cars are covered by manufacturer's 3 years warranty, so you don't need to buy anything extra.
   • Your car is over 10 years old.
     There is an unwritten rule in the auto industry - full coverage for old vehicles usually ends either on the vehicle’s 10th anniversary or at 120,000 miles on the vehicle’s odometer. Any Company that tries to sell you a warranty protection beyond that limit is clearly overpromising and could be a scamming company to avoid.
2. Know How to Choose the Right Service Provider

   There are a lot of scammers in the extended auto warranty market. So you must be very careful when selecting your service provider. Don't go with a company whose records cannot be found in BBB (Better Business Bureau) or in D & B (Dun & Bradstreet Credibility Corp.). Also, ignore any extended warranty offers coming by mail, by phone or in a form of an annual promotion or "As Seen On TV" sales. Reputable leaders in the auto extended warranty industry never use this sale tactics.

   There is about a dozen leading auto warranty businesses in the USA with approximately several hundred 2nd-tier and several thousand 3rd-tier companies (warranty brokers) wrapping their businesses around that companies. Try to avoid the service middleman and get directly to the source - you will save a lot. As a first step, start with reviewing top auto warranty provider lists published in the internet but take it with a pinch of salt. Business ratings are often partial, inconsistent and may be not up-to-date.

   Still not sure where to start? You can start with a list of CarGalaxies.com recommended warranty providers and get instant online quotes from them at our Compare Warranty Quotes page. As per our latest routine update all companies in that list are active, are BBB-accredited businesses with A+ rating and all have a descent Alexa.com-proven web traffic.

   And note - always get a second opinion before making your final decision.
3. Know How to Choose the Right Coverage

   Knowing what extended warranty coverage you really need is another big buck saver. Make sure that you understand the auto warranty's main coverage plans and use them to your benefits. To learn more about existing warranty plans and a coverage behind them feel free to read What Types of Coverage Are Usually Offered in Extended Auto Warranty Market section in our Q-n-A page.

4. Ask for Cancellation and Contract Transfer Policy.

   Make sure that you can cancel your policy if you have changed your mind. Note, that some businesses will charge you stiff penalties for any premature cancellation of your policy. Contrary to that, good extended warranty companies provide 30-days or 60-days initial cancellation policy with a full refund and normal any-time-cancellation with pro-rated refund. They also provide contract transfer provision in the case if you sell your vehicle to another person or business.

5. Review the Warranty Contract Before You Buy
   
   Some warranty providers will try to make you buy their services based on their business brochure. Never forget - a brochure is not a legal document, a contract is. Always review the contract very carefully. Pay special attention to the fine prints - are there any exclusions or special provisions which were not discussed with you? Review carefully the list of parts which are NOT covered by your contract. Make sure that you understand how expiration mileage is calculated in your policy - some warranties (bumper-to-bumper, for example) expire when the odometer reaches the limit stated in your contract, others (like stated auto parts and powertrain) - on total mileage incurred after the warranty contract was signed by you.