Finding the Perfect Extended Service Contract

The term extended auto warranty (what most people call them) is actually a misnomer, it’s not a warranty at all but more of a service contract. Think of it as a way to protect your investment, that investment being your new car, truck, van or SUV. With the average new car costing somewhere in the ballpark of $25,000 we all wish for trouble free operation from our investments, but that’s not always the case.

Nobody wants to see their pride and joy turn into a money pit and that’s where service contracts come in. Extended service contracts could be seen as health insurance for your car, in fact it works in much the same way and can possibly save you a ton of money in the long run.

Before purchasing an extended service contract consider the following:

1. Do you really need it?

When deciding to buy a service contract take into consideration if the vehicle you’re purchasing is still under factory warranty and if so how long is it for.  For instance if the warranty is for 5 years and 60 thousand miles but you plan driving it for just two years and you only put on 15 thousand miles per year then an extended service contract probably isn’t for you.

On the other hand if you plan on driving your new vehicle for a long time them a service contract might be for you. There is one caveat to keep in mind though and that is an extended warranty costs less while the vehicle is still covered under the factory warranty.

If you think of an extended service contract as a security blanket then you may not mind paying a fee up front if it means you save money in the long run.

2. Who is behind the warranty?

Who is backing the warranty is an important, but mostly overlooked step, when decided to purchase a service contract. It could be backed by an independent warranty company or the auto manufacturer. While the auto manufacturer can be more expensive they receive high marks, and you almost never have to worry about them not paying your claim. You may opt for an extended warranty backed by an independent due to price but make sure that they are reputable and their financials are in order by checking their rating with Standard & Poor, if they have at least an A then you should be good to go.

3. What is the deductible?

Make sure that you investigate the policy’s deductible before you sign your name on the dotted line. While the amount is important you must also take into considerations if its paid per visit or per repair. The difference being that a per visit deductible is paid per visit no matter how many repairs are done while a per repair deductible is just that, per repair.

4. What exactly is covered?

Is it a power train warranty or bumper to bumper? Pay as close attention to what’s NOT covered as to what IS covered. Before deciding on a plan take into account all of its ins and outs.

5. Do you have to pay out of pocket, up front?

Some extended warranty providers require that you pay for the repair up front then get reimbursed for it, sometimes months later. Ideally you want a service contract company that pays the dealership directly.

While there are other things to consider, we at Grubbs Infiniti hope that this list helps you to get started. Keep in mind that you should explore all of your options, ask lots of questions and make sure  that you are fully  informed before you ever make a decision.

If you have any extended service contract questions please feel free to post any of your questions bellow.