Tips for buying a new or used car extended warranty, avoiding scams
With the rising costs of automotive repairs, the purchase of an automobile Extended Warranty Service Contract is a necessity.
Find Superior Mechanical Extended Warranty coverage at wholesale prices, often up to 60% less than the dealer.
Do I need an auto extended warranty?
The cost to repair today's complex Cars, SUV's and Vans are rising. If you lease your Honda or Toyota for 36 months you don't need extended auto warranties, and it's a scam for a dealer to sell you one. If you got suckered into a 60 month auto lease, you should buy a extended warranty, as you are responsible for all repairs. Auto extended warranties protect yourself from inflation later when you need repairs. Like insurance, if you don't buy it, you'll be looking over your shoulder. The most common repairs are A/C, transmissions, and electrical. Most people buy their auto warranty because they know 10 minutes after the car maker's warranty expires, something will fail and one covered failure can pay for the cost of the extended car warranty.

Before we get into more detail it's important to understand the different parts of an auto warranty. It's also good to know the difference between a new car warranty and an extended auto warranty. A typical new car warranty has two parts: the "bumper to bumper" warranty, which covers everything except the "wear" items such as brakes and tires; and the powertrain warranty that covers all the parts that make the car move, such as the engine and transmission.

In essence, an extended warranty is an insurance policy on your vehicle, a safeguard against expensive, unforeseen repairs. The term extended warranty is actually a misnomer, since, in the strictest sense of the word, these aren't warranties at all. Like auto warranties, they cover repairs and/or regular maintenance for an agreed-upon period of time. True warranties, though, are included in the price of the product; extended auto warranties are really service contracts, since they cost extra and are sold separately.

An extended warranty may be purchased at the time you buy your vehicle; it's also possible to purchase one much further along in your ownership experience. If you're the type who likes to be prepared for all eventualities, an extended auto warranty may be just what you're looking for. Bearing in mind the ever-increasing cost of vehicle repairs, these service contracts can make a lot of sense.

An extended auto warranty can be purchased to prolong the coverage of the bumper-to-bumper warranty. Most people are familiar with the extended warranty that is sold at dealerships. This is sometimes called a "factory warranty" because factory-trained technicians perform the required work on the car. There are also "third-party" warranties which can save consumers money but are generally less convenient to use. Many third-party warranties require out-of-pocket payment for repairs before reimbursement. Weigh all these factors carefully before you make your choice.
Typical Auto Extended Warranty Coverage Types
Extended auto warranties come in many levels/types of coverage. Some car warranties cover just mechanical breakdown, while better warranties also cover wear & tear, and overheating. Verify coverage of your auto warranty.

Luxury Coverage Auto Warranties
Coverage for popular luxury items like Emissions System, GPS/Navigation, DVD/Entertainment, Phone and Internet Access systems.

Bumper To Bumper Extended Auto Warranties (Also Called Exclusionary Auto Warranties)
I recommend this type of auto warranty, you'll have little to worry about, a true bumper to bumper car warranty, usually top of the product line. Nearly all parts on the car are covered, except the "exclusions list". These auto warranties are called "Exclusionary", they cover so many parts the contract only lists which parts are excluded.

Intermediate Auto Warranties ("Named Component" Auto Warranties)
This car warranty is good if you have ABS, power, turbo, covering more than basic auto warranties. Dealers falsely refer to these Named Component car warranties as "bumper to bumper", then name components covered. These auto warranties are ok, but leave out parts. Scam Alert: Some dealers compare this car warranty to competitor's higher priced exclusionary plan to trick you into buying the dealer's "lower priced" car warranty. This auto warranty is a good compromise between price and coverage.

Big Ticket Item Coverage
For used vehicles, this kind of car warranty covers major items and might not cover wear and tear, radiators, ABS brakes, Turbos, power, etc.

How To Buy An Auto Extended Warranty & Avoid Scams
Who is behind the warranty that you're considering?
An extended auto warranty may be backed by an independent warranty company (these are known as aftermarket warranties) or by the covered vehicle's manufacturer. Knowing who will be underwriting your policy can give you insight into the strengths and weaknesses of the contract you're considering. Manufacturer-backed warranties score very highly when it comes to ease of use. However, aftermarket warranties are often cheaper. (If you opt to purchase an aftermarket warranty, take a look at how the company's financial strength has been rated by A.M. Best and/or Standard & Poor's; this will give you an indication as to its ability to pay your claim. Your safest bet is to choose a company that has a minimum "A" rating with Standard & Poor's, and/or a minimum "A" or "A-" rating with A.M. Best.)

Don't buy extended auto warranties by price alone, avoid cheap auto warranties!
You get what you pay for. Cheap pricing is BAD for auto warranties. With high profile auto warranty failures in years past, hopefully you learned the lowest warranty price quote has the highest risk of a warranty company failing leaving you with worthless paper. If they undersell the competition too much, something must give, and they Must reject your claims to overcome the lower sales price. They usually under fund the warranty claims reserve accounts to pay for your car warranty claims. Don't buy the cheapest extended warranties, because they won't be around to cover your auto warranty claims, you have been warned. I'd rather see you buy no car warranty at all, than a cheap warranty almost guaranteed to go belly up. They use tomorrow's sales proceeds to pay for today's claims until they crash and burn. There's hundreds of fly by night companies, If you can't get information on a warranty company via Better Business Bureau, then don't buy from them. Cheap warranties exclude lots of coverage, they make up stupid reasons to reject your warranty claims, leaving you with few covered repairs, many don't answer their phones, or require you to pay shops first then beg for reimbursement from the warranty company.

Why most car dealer extended warranties are not as good as some online warranties
Dealers don't tell you if they're selling you a mechanical breakdown contract, not as good as wear & tear contracts. They are giving you half the coverage, and most car dealer auto extended warranties don't cover overheating. Then they slap their dealer label on your new Honda so you can be a moving billboard for their dealership. Now That's a scam!

Don't buy an auto warranty to cover pre existing failures.
Don't file a claim within the first 60 days!

When you buy a used car with no pre existing conditions, the car runs fine with no issues for several months. These are accepted odds by warranty company actuaries. When abnormal things occur, red flags go up. When a sell your used Ford, you don't have 4 parts break in the first 30 days. If this happens, industry standard red flags go up. Contracts have verbiage that even if your car was an inspected prior to selling you a warranty, it can still be shown to have a pre-existing condition. Don't buy a problematic used car expecting the auto warranty to cover repairs. They are a lot smarter than you. I tell people don't file a claim within 60 days to stay off the radar map and avoid triggering red flags. Warranty companies know that 90% of the claims filed in the first 30 days are fraudulent claims on pre-existing failures, that can often be proven by independent inspectors. Don't do it.

Beware of repair shops that refuse to work with your warranty company
There are a few scam artists out there. Before your warranty pays the service shop, they ask for a detailed written estimate of the repair, the parts, and the labor from the repair shop. They know if the repair shop is overcharging standard repair labor hours, or forcing extra parts on you that you don't need. The guilty shops lie and tell you they don't like your warranty company because their "checks bounce". Avoid that service shop immediately.

Check The Warranty Contract Before You Buy, NOT After You Buy!
Don't leave a dealer with a false sense of security that you have an auto warranty protecting you from everything. Some warranties have so many weasel clauses you're lucky if half the claims are paid. Car dealer warranty exclusions are printed in the policy book which conveniently arrives After you buy your Car, because they don't want you to dig. The more you dig, the more you'll find. If they can't show you a copy of the contract, Don't Buy the Warrenty! Sales brochures are not contracts. Lies form sales people are not contracts. Before you buy you want to see in Writing "What is not Covered". Savvy car buyers bypass 200% markups of dealers buy directly from trustworthy online warranties at significant savings. Online warranty sites will email you a PDF file of the contract for you to view. Ask the dealer why they refuse to do likewise.

Mechanical Breakdown warranties vs. Wear & Tear auto warranties
Is your auto warranty repair due to failure from a "mechanical breakdown" or is it "Wear & Tear"? You want warranty coverage for BOTH! Most auto warranty failures are wear and tear, so you can bet your cheap "mechanical breakdown" warranty company will classify your warranty repair as wear and tear and reject your warranty claim right off the bat. Thank you for calling. Often the extended warranty sold by car dealers is a confusing mechanical breakdown insurance policy that can cost over thousands! This is not what you want. You want both "wear & tear" AND "mechanical breakdown" coverage in your warranty contract. Many items wear down, they don't break, so they are not covered by most mechanical breakdown warranties. People complain that car dealers lie to them and tell them "everything" is covered, giving a false sense of security. Some car dealer warranties require that you have them do all repairs. What if you can't get your car to the dealer? Before buying a vehicle service contract, carefully review what is covered and not covered to see whether wear and tear claims are excluded from coverage. If you don't get a wear and tear type of warranty, you'll get screwed I guarantee it. If you own a Nissan, BMW, Chrysler, Honda, Toyota, Hyundai, etc., you don't have to take it to your Nissan, BMW, Chrysler, Honda, Toyota, or Hyundai dealer.
Extended Warranty
I don't need an extended warranty, I'm covered by the manufacturer
Manufacturer warranties only cover repairs for a certain period.

An extended auto warranty will provide you with peace-of-mind protection regarding such expenses. Some are transferable, allowing for increased vehicle resale value.

I'll just buy my auto warranty at the dealer, it's convenient
Car Dealers are the middlemen, you will most likely end up paying upto 2 to 3 times what you pay in the market place.

Make a wrong move here and it could cost you hundreds of dollars.

Beware of the extended warranty add-on
After hours at a car dealership, when you're tired from long negotiations over price and financing and all you want to do is step into your new car and drive away, the real hard sell begins.

The auto finance manager will start talking about an extended warranty. An extended warranty is actually an extended service contract, which covers the cost of certain repairs and problems after a car's factory warranty expires!

Beware, Extended warranties are enormous moneymakers for auto dealers
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