Extended Warranty Myths

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With so many extended car warranties on the market, it is hard to differentiate between fact and fiction. With so many myths floating about, it can be a little confusing. We have compiled some of the most common myths and give you the cold, hard facts.

MYTH #1: You can only purchase a vehicle service contract, or extended warranty, from the dealer where you purchased your vehicle. 

FACT - There are several options for extending your car’s warranty. While dealers are one source, they're not the only source. When searching for an extended warranty, do your homework. Make sure you look for the most complete, reliable coverage that fits your needs. Also, look at price. You want to get the fairest price, no matter who is selling the vehicle service contract.

MYTH #2: All extended auto warranties are basically the same. Look for the cheapest and purchase that one.

FACT - There are many different types of extended warranties. Some are better than others. You want to review the contract to see if you are getting your money’s worth.  If a company will not let you preview the contract, or there is questionable language in the contract, walk away. No matter how appealing the price is.

Some questionable contract language:

  • At the sole discretion of the Administrator
  • Parts may be used or recycled
  • Gradual reduction in operating performance not covered
  • Any covered part that has not failed. This includes seepage of seals and gaskets.


MYTH #3: You do not need to purchase a vehicle service contract until your factory warranty has expired.

FACT - The longer you wait, the more expensive an extended warranty will be. One common misconception is that if you purchase your extended warranty before your factory warranty expires, you are paying for double coverage. In fact, what you are doing is locking in a cheaper cost and rates now and protecting against increases in cost in the future. Also, most extended warranties come with roadside assistance, a benefit that you can use as soon as your purchase the warranty. Then when your factory warranty has expired, your extended auto warranty will go into effect.

MYTH #4: In order to qualify for dealer financing, you must purchase a vehicle service contract.

FACT - Whether or not you qualify for financing has nothing to do with buying an extended warranty. It has to do with your credit, your down payment or trade, and the purchase price of the vehicle

MYTH #5: A "mechanical breakdown" warranty and a “wear and tear” warranty offer the same coverage.

FACT - Different types of warranties cover different items. Vehicle service contracts that offer “mechanical breakdown” will only cover a part if it fails due to defects in material or workmanship. A wear and tear warranty covers mechanical breakdowns and also include parts that simply wear out over time due to normal use. The older your vehicle is, the more important wear and tear coverage becomes.

MYTH #6: If you have extended warranty coverage, you never have to worry about your vehicle.

FACT - While extended warranties do cover you from breakdowns, you still have to keep your vehicle properly maintained and cared for. If you haven't been properly maintaining your vehicle as outlined in the owner's manual, your vehicle may end up with a lot of problems that your plan may not cover. You also need to keep accurate maintenance records and receipts.

To sum it all up, do your homework when purchasing a vehicle service contract. No matter where you purchase it, know what your are getting and get it before your factory warranty expires to save yourself money. Also, keep your vehicle maintained according the manufacturers specifications found in your owner’s manual.