Dissecting warranty details
Beyond normal wear-and-tear, bumper-to-bumper issues, exclusionary coverage only – all terms in an auto warranty contract that could either leave you holding onto your cash or the bill.
It's the little things that matter in a warranty contract. If you read the fine print, you realize there are obligations on your end, such as regularly scheduled inspections. You want to make sure if your vehicle has certain features, like Vehicle Stability Control (VSC), the warranty covers these repairs. Also, if you modify with non-genuine or put aftermarket accessories on your vehicle – which in turn causes a warranty-covered part such as a transaxle case and its internal parts to wear – your warranty won't cover the damage.
Know your warranty deductible or how much you must foot the bill when things go wrong. Most warranties allow you to take your car to any certified mechanic; yet some dealer agreements state service at franchised dealers only – this can be inconvenient, especially if your car must be serviced or breaks down outside major metropolitan areas. Find a contract that pays the repair shop directly so you are not waiting around for a reimbursement. Make sure you purchase a transferable agreement in case you decide to sell the vehicle.
Why go with an extended warranty
Before the economic crash, consumers were reluctant to invest in this type of insurance. Extended warranties were viewed as either a blessing or another unnecessary expense – a gamble against time and karma, if you will. But with drivers holding onto their cars longer and buying used, it's time to reexamine your luck.
Regardless of how long you decide to hold onto your car or buy used, if you've ever had a major mechanical breakdown and had that extended warranty to cover the high-priced costs, you realize shelling out for a monthly premium ends up being more cost-efficient than getting gouged at the repair shop. In today's current economy, many consumers find knowing you have coverage is worth the cost of vehicle service agreements.
When warranties (or cars) go wrong
A breach of warranty is when the promises have been violated in a contract. Each state has "Lemon Laws" to protect your car's rights if you can prove a persistent problem. Results can be a complete reimbursement or replacement.
President Obama recently announced the Treasury Department would guarantee coverage on all new domestic autos in distress through the Warrantee Commitment Program. This means if any Chrysler or GM products are purchased during restructuring – also defined as bankruptcy – the government will identify an auto service provider to supply warranty issues. While such a change brings down the resell value of your vehicle, it's good to know even the government recognizes the importance of auto warranties.