You should only purchase an extended warranty for a used luxury vehicle if the terms are in your favor. The cost should be below average. The policy should cover most major repairs and the warranty company should have a good reputation.
The 3 main factors to consider when making a decision on purchasing an extended warranty for a used luxury vehicle are the cost you pay for the policy, the repairs that the policy covers and the reputation of the warranty company. There are many costs associated with purchasing a used luxury vehicle, taxes, insurance, fuel and maintenance. A warranty is another cost that should help mitigate potential high repair costs and provide piece of mind. The difference between used luxury vehicles and new or non-luxury vehicles, as they relate to warranties, is that some used luxury vehicle brands have a reputation for having common issues that can be expensive. Since these vehicles experience maintenance issues and luxury brands have higher parts and labor costs, it might be a good idea to at least consider an extended warranty.
Many experts will advise against purchasing extended warranties because mathematically they are not worth it. Consumer reports support this claim and show that car owners typically paid more for the coverage than they got back in benefits. These statistics are an average of all car consumer warranty expenses; we think that the used luxury vehicle segment is slightly different in maintenance expenses. Since some luxury models statistically are known for maintenance issues it might be financially worth it to consider an extended warranty if the terms are reasonable.
Cost
The first factor to consider is cost. The main reason why extended warranty policies are considered to be bad ideas is because they are too expensive and the money they cost can instead be put aside in an emergency fund and withdrawn from in the event of needed repairs and maybe have money left over, as opposed to paying for the policy and never using that amount in benefits.
If you have a used luxury vehicle the chances of having maintenance issues might be above average. If you can find an extended warranty policy for below average cost then it might be worth considering because the chances of you using the warranty benefits will increase and might end up being worth more than the cost of the policy. Please use our used luxury extended warranty policy finder tool to compare policy rates from different companies.
Coverage
The second factor to consider is the type of coverage. Coverage is usually categorized by:
Length of Time,
Amount of Miles and
Type of Repairs that are Covered.
The most comprehensive policy is referred to as bumper-to-bumper and it covers all mechanical failures. The most essential term to understand in an extended warranty policy is what type of repairs are covered. Extended warranty policies can be long and complicated but figuring out what parts are covered or excluded is vital because a common complaint isn’t cost but the surprise when the owner is in need of car repairs and finds out that the part they assumed was covered under the policy is excluded. Which makes them wonder what have they been paying for the whole time?
Since bumper-to-bumper coverage includes all mechanical parts it is typically more expensive. If you cannot find an affordable bumper-to-bumper policy, do a google search or speak with a mechanic about the common problems that your model used luxury vehicle experiences. Make sure the policy that you consider includes all of the common mechanical issues that your vehicle is known for having. Please use our used luxury extended warranty finder tool to compare prices from different company policies.
Other terms of a used luxury vehicle extended warranty policy to consider are the length of time and amount of miles that the policy will last for. Car warranties will vary based on the vehicle and the company that is providing it but typical policies are:
New car dealer warranties – 3 to 4 years and 36,000 to 50,000 miles.
Used car dealer warranties – 5 to 6 years and 60,000 to 70, 000 miles.
Used car non-dealer warranties – 7 to 10 years and 80,000 to 100,000 miles.
If you know how long you plan on owning the vehicle for and how often you plan on driving it, then that will help you make a more informed decision on the length of policy that will be appropriate for you. Evan if you purchase a policy that last longer than your ownership of the vehicle, the policy coverage stays with the vehicle and can help make the vehicle more attractive when it is time to sale it.
Of course as a vehicle gets older and has more miles on it the prices for warranties will become more expensive because the chances of vehicle parts need repairs increases. Please use our used luxury extended warranty finder tool to compare prices from different company policies.
Reputation
The third factor to consider is the type of company that is providing the policy and their reputation. Even if you find a good policy with terms in your favor, for a below average price, that covers all the parts that you need. When it comes time to file a claim and for the warranty company to honor their contractual obligation, it is better to be involved with an established, reputable company that will not make the process difficult.
There are several types of companies that offer extended warranty policies, which include:
Dealership
Auto Clubs
Insurance Companies
Warranty Companies
Dealerships, auto clubs and insurance companies are all safe options to consider when looking for an extended warranty. They are established companies that have been in business for years and will continue to be in business for years to come and they value protecting their reputation and good will with the public. They may not always have policy terms that are in your favor but you can trust that they will honor their contractual obligations. They have customer service staff that will help answer questions and explain the process to you.
Warranty Companies may or may not be established, they might have low prices and what seem to be favorable policy terms but they might have bad customer service. When a claim is filed they might challenge the validity of the repairs being covered. They might be difficult to get in contact with and to get helpful answers from. In some extreme cases they might go out of business during the policy term leaving you with no recourse.
If you consider getting an extended warranty we recommend choosing a policy from an established company. Warranty companies have bad reputations because their only stream of income is from the policies so their profits are significantly affected when they have to pay out for repair claims. As opposed to dealerships who also have profits from car sales. Auto clubs who also have profits from other services. And insurance companies who also have profits from insuring other assets. If you are still considering getting a policy with a warranty company you should check online for customer service reviews to see how the company pays it claims. Please use our used luxury extended warranty finder tool to compare prices from different company policies.
