Extended Warranties

The subject of this section is the new/used vehicle extended warranty or service contract, which finance managers at dealerships will try to convince you is the best thing since sliced bread. And although we wouldn't go quite that far, considering today's ever increasing costs for repairs and longer length of vehicle ownership, an extended warranty may be a good idea -- AS LONG AS YOU DON'T PAY TOO MUCH FOR IT!

You may have read or heard opinions from so-called experts who flatly state that all extended warranties are a bad idea, and that you should put the money you would have spent on an extended warranty into a savings account to cover the potential cost of repairs. Unfortunately, the overwhelming majority of buyers do NOT put this money into a savings account, so when a catastrophic breakdown occurs, the owner ends up facing a huge repair bill.

Remember that an extended warranty is just another name for a "mechanical insurance policy" on your vehicle, and the entire concept of all insurance is based on receiving more in premiums than what is paid out in claims. The primary benefit of an extended warranty is the peace of mind that this, or any other knd of insurance provides for the buyer - and that is a personal decision.