Do you need an extended car warranty — car repair insurance?

All new cars come with a new-car warranty from the car manufacturer. There is typcially a general “bumper-to-bumper” warranty that covers just about everything that is not a wear-and-tear item, and a powertrain warranty that covers the engine, transmission, and drivetrain components.

For most new cars, the general warranty is good for 36 month or 36,000 miles, and the powertrain warranty for 60 months or 60,000 miles. Some car brands have higher mileage warranties, as high as 10 years and 100,000 miles.

There are also separate warranties on tires, batteries, and a few other components.

That’s about warranties on brand new cars. What about used car warranties? Do used cars come with warranties?

If you buy a relatively new used car, it may still have some new-car warranty left. However, once that warranty expires, you are on your own when paying for breakdowns and repairs — unless you buy an extended warranty — a kind of car repair insurance.

Many new first-car buyers mistakenly think that auto insurance covers breakdowns and repairs not associated with accidents. That thinking would be wrong. Auto insurance only pays for repairs caused by an accident. Ordinary parts failures are not covered.

Extended car warranties protect you from the surprise expenses of having your car repaired, which can be very expensive in these days of high parts and labor costs. Of course, if you have plenty of money in the bank for such emergencies, you may choose not to have a warranty and simply pay for repairs out of your own account.

Many new-car dealers sell extended warranties but there are also independent companies that sell used-car warranties. Just make sure you understand exactly what is covered and, more importantly, what is not covered. Read the fine print.

Most independent warranty companies allow you take your car to any professional repair shop. Some are more restrictive. Some require you to pay up front for repairs and then get reembursed later by the warranty company. Some pay directly to the repair shop without you having to put up money first.  Some have time restrictions and others have mileage restrictions.

If you decide to buy a certified used car (see Certified Used Cars), you may be given a short warranty, usually about 90 days,  with your purchase. However, this doesn’t eliminate the need for an extended warranty that covers you after the 90-day warranty expires.

In summary, if you buy a used car and you can’t afford to pay for expensive repairs, you should consider buying an extended warranty to cover you after the new-car warranty has expired. Shop around for the best prices and most coverage. Check for online reviews of the companies you look at and check with the Better Business Bureau.


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