When buying a new car, you may be offered an extended car warranty on that vehicle. You may not think you need it, as most cars come with some type of basic warranty, but you shouldn't be so quick to dismiss this possibility. There are times when that extended car warranty can make more financial sense in the long run and offer some great protections you may not be considering. Note a few things to keep in mind about extended car warranties, so you can determine if it's the right choice for you.
Cars today have more computer parts and technology under the hood than ever before, and these parts can be very expensive to fix and replace. This means more than your GPS system and MP3 player located in the dashboard. Car alarms and locking mechanisms are more complicated than ever and all run by the car's computer, and a computer may run your automatic braking system, electronic sensors that automatically adjust which car features get electricity, and other such parts. Having to replace these parts and technology can get costly, but an extended car warranty may cover their costs in case of needed repairs.
Tailor-make the warranty
You can often tailor a car's extended warranty to your own specific needs, and this can make them very beneficial for you. As an example, if you live in the city with lots of bumper-to-bumper traffic, you may be at a higher risk for a collision. If you live in a more rural area, you may have a higher risk of being stranded after a collision or breakdown. You might be able to tailor a warranty to cover collision damage for city living, or one that covers roadside assistance for getting stranded in other areas. When you can tailor-make your own warranty this way, it can be more financially beneficial for you overall.
Length of ownership
How long do you plan on keeping your car? If you typically sell a car or trade it in every few years, an extended warranty may not be needed. However, if you plan on owning your car for many, many years, an extended warranty can often be a good investment. In some cases the warranty can even be transferred to a new owner, so that the car has more resale value if you do decide to sell it a few years down the road. Note if this is a possibility if you know you may sell your car rather than keep it for the long-term.