Is an extended car warranty really useful?

Is an extended car warranty really worth it? When buying a car, the question of an extended warranty often arises. This extra protection, offered after the factory warranty has expired, can seem essential in the face of rising repair costs. But is it really worth it? In this guide, we'll explore the pros, cons, and when an extended warranty might be a good investment to help you make an informed decision.

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Table des matières : La garantie prolongée pour une voiture neuve, est-ce vraiment utile?
  1. Table of contents: Is an extended warranty for a new car really useful?
    1. Introduction to Extended Warranty
      • Definition and operation
      • Difference with factory warranty
    2. Benefits of Extended Warranty
      • Long term protection
      • Peace of mind
      • Coverage for costly repairs
    3. When is the extended warranty beneficial?
      • Scenarios where it can be profitable
      • Types of drivers who benefit most
    4. How to choose an extended warranty?
      • Comparison of offers
      • What to check in contracts
      • Questions to ask before signing

Extended car warranty: is it really necessary? Video explanations.

In this video, we’ll explore why extended warranties are not only useful, but necessary for many drivers. We’ll cover the benefits they offer, especially as your vehicle reaches an age where repairs become more frequent and costly. Plus, we’ll show you how an extended warranty can help you avoid unexpected expenses by covering major breakdowns that could otherwise put a serious strain on your budget.

Introduction to Extended Warranty.

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There extended warranty is an additional service that aims to provide extended protection beyond the standard factory warranty. This type of warranty is increasingly popular among new car buyers, especially those who plan to keep their vehicle for a long time. Here’s a detailed look at what an extended warranty is, how it works, and why it might be useful.

1. Definition of extended warranty

  • What is this? An extended warranty is a service contract that extends coverage for mechanical and electrical repairs on a car beyond the period covered by the factory warranty. This contract is often offered by the dealership when purchasing a new or used car, but it can also be purchased later.
  • Example : A buyer who purchases a new car with a 3-year/60,000 km factory warranty can decide to purchase an extended warranty of an additional 2 years, bringing the total coverage to 5 years/100,000 km.

2. Difference with factory warranty

  • Duration and coverage The factory warranty is usually included in the purchase price of the car and provides full coverage for a limited period. On the other hand, the extended warranty is a paid service that applies after the factory warranty expires.
  • Example : A car may come with a 5-year/100,000 km factory warranty covering the transmission and engine, but an extended warranty can extend that coverage to other components like the electrical system or on-board technologies, up to 7 years/150,000 km.

3. How the extended warranty works

  • What is covered Extended warranty coverage varies by contract. Some cover only major components (like the engine and transmission), while others may include more specific items like navigation systems, air conditioning, or electronic sensors.
  • Example : A car owner can choose an extended warranty that covers not only mechanical breakdowns but also roadside assistance and a loaner vehicle in case of extended repairs, thus providing a more comprehensive level of service.
  • Claims Process In the event of a breakdown, the owner must follow the claims process set out in the contract, which may include the obligation to take the car to an approved garage or obtain prior authorisation for repairs.
  • Example : If a transmission fails at 50,000 miles, an owner with an extended warranty could have the car repaired at no extra cost, provided they follow claims procedures, such as having the fault assessed by a licensed mechanic.

Benefits of the extended warranty.

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Subscribe to an extended warranty When buying a new car, there are several significant benefits that are particularly attractive to those who want to protect their investment in the long term. Here's a detailed look at these benefits, illustrated with real-world examples.

1. Long term protection

The extended warranty provides continued protection long after the standard factory warranty expires. This means that even as the car starts to rack up miles or get older, it remains covered against mechanical and electrical failures that may occur.

  • Example : Let’s say a car owner buys a new SUV with a 3-year or 36,000-mile factory warranty. If that owner plans to keep the vehicle for 6 to 7 years, the extended warranty could add an additional 3 to 4 years of coverage, bringing the total protection to 6 or 7 years, or up to 75,000 miles. This allows major components like the transmission, engine, or electronic systems to be covered even after the initial warranty has expired.

This long-term protection is particularly valuable for owners who wish to keep their car for an extended period, as it reduces the financial risks associated with normal wear and tear and the aging of the vehicle.

2. Peace of mind

One of the most appreciated benefits of an extended warranty is the peace of mind it provides. Knowing that the car is protected against unexpected breakdowns, owners can use their vehicle with peace of mind, without worrying about unexpected repair costs.

  • Example : Imagine a driver who uses their vehicle for long daily commutes, such as a sales representative or a healthcare professional who must travel frequently. For these individuals, vehicle reliability is essential. By purchasing an extended warranty, this driver knows that they are covered in the event of a major breakdown, such as an engine problem or transmission system failure, which could otherwise result in costly repairs and significant disruption to their daily work.

Peace of mind is even more important with modern cars, which are often equipped with complex technology. Knowing that these sophisticated systems, such as navigation systems, driver assistance systems or safety sensors, are also covered can significantly reduce the stress of vehicle ownership.

3. Coverage for costly repairs

One of the main attractions of the extended warranty is its ability to cover expensive repairs that could otherwise seriously strain the owner's budget. Major components of a vehicle, such as the engine, transmission, or electronic systems, can result in bills of high repair if a failure occurs after the factory warranty has expired.

  • Example : A luxury car owner, for example, might be faced with repair costs of several thousand dollars to replace a faulty transmission after 5 years of use. With an extended warranty, these costs would be covered, significantly easing the owner's financial burden. Similarly, replacing an often expensive air conditioning system or electronic control module could be covered by the extended warranty, avoiding unexpected expenses that can be difficult to manage.

Coverage for costly repairs is even more advantageous if the vehicle is used intensively or in difficult conditions, where wear and tear is more rapid. The extended warranty then allows the vehicle to be kept in good working order without the owner having to bear exorbitant costs.

4. Increased protection for vehicles financed by an auto loan

If your vehicle is financed by a car loan, the importance of purchasing an extended warranty becomes even more crucial. Indeed, in the event of a costly breakdown, having to finance repairs on top of loan payments can quickly weigh on your budget. The extended warranty protects both your vehicle and the loan, reducing the risk of having to dip into your investments or savings to cover unexpected expenses. This way, you avoid having financial problems following a surprise at the real cost of repairing a vehicle.

  • Example : A car owner with 4 years of loan payments remaining could be stuck with a $3,000 bill for a major repair. Without an extended warranty, this cost could force the owner to withdraw money from their investments, which could hurt their financial situation in the long run. By having an extended warranty, these costs are covered, allowing the owner to preserve equity in their assets and focus on paying off their loan without added financial stress.

In conclusion, the extended warranty is a valuable tool to protect your automotive investment, especially if you finance purchase by loanIt offers increased financial security and peace of mind essential to fully enjoy your vehicle without fear of the unexpected.

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We compare multiple extended warranty companies and providers to provide you with the best coverage at the best price for your new or used vehicle. This allows you to quickly compare your dealer's offer. Plus, we have access to the same providers as your dealer, whether they are a new or used vehicle dealer.

Did you know that you are not required to purchase an extended warranty at the time of your purchase? In fact, you can choose to purchase this same additional warranty at a later time. Ideally, you should purchase an extended warranty before the manufacturer's basic warranty ends. This way, you avoid additional costs and avoid paying for a full inspection.

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When is the extended warranty beneficial?

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Extended warranties can be a wise investment in specific situations. They are particularly beneficial for certain types of drivers and vehicles, including used vehicles, new vehicles, and hybrid and electric models. Here’s a look at the scenarios where extended warranties can be cost-effective and the driver profiles that benefit most from them, with real-world examples to illustrate these situations.

1. Scenarios where extended warranty can be cost-effective

Extended warranty coverage becomes particularly cost-effective in situations where the risk of costly repairs is high, or when the vehicle ownership period is long. Here are some scenarios where it can be a great choice.

  • Used vehicles : Used vehicles typically have a higher risk of mechanical or electronic failures than new vehicles, due to increased wear and tear. An extended warranty can provide protection against these risks, by covering repairs after the limited warranty sometimes offered by the dealership has expired.
    • Example : Let's say a buyer purchases a 4-year-old used car with 50,000 miles on the odometer. While the vehicle may appear to be in good condition, it is either already out of the factory warranty or very close to expiring. By purchasing a 2-year extended warranty, the buyer can protect themselves from costly repairs, such as replacing a transmission or air conditioning system, that could arise in the years to come.
  • New vehicles with a long expected ownership period : For drivers who plan to keep their new vehicle for many years, an extended warranty may be a good idea. Although new cars are less likely to experience mechanical problems, the risk increases as the vehicle ages.
    • Example : An owner who buys a new SUV and plans to keep it for 10 years might want to consider an extended warranty that extends beyond the initial 5-year coverage. This provides additional protection, especially after the factory warranty period, when major repairs become more likely.
  • Hybrid and electric vehicles : THE hybrid and electric cars are equipped with advanced technologies, including high-voltage batteries, power management systems, and sophisticated electronic components. Repairs to these items can be extremely costly once the factory warranty expires.
    • Example : An electric car owner can feel reassured by purchasing an extended warranty that covers electric vehicle-specific systems, such as the battery or electric motor, which can cost thousands of dollars to replace or repair.
  • Drivers traveling long distances : For drivers who drive a lot of miles each year, the risk of premature wear is higher. Extended warranty can provide protection against mechanical breakdowns that can occur due to heavy use.
    • Example : A sales rep who drives 50,000 km per year could reach the limits of the factory warranty in just 2 years. By purchasing an extended warranty, he ensures that his vehicle is covered for breakdowns that may occur due to heavy use, even after the initial warranty has expired.

2. Types of drivers who benefit most

The extended warranty is particularly beneficial for certain types of drivers, depending on their use of the vehicle and their expectations in terms of reliability.

  • Drivers who want to keep their car for a long time : Those who plan to keep their car for 7, 8, or even 10 years will find value in an extended warranty that covers mechanical breakdowns beyond the initial period. This keeps the car in good condition without having to incur heavy repair costs.
    • Example : A driver who has a special attachment to their vehicle, perhaps because they have invested in specific options or because they are satisfied with its performance, may find the extended warranty particularly reassuring. It allows them to enjoy their vehicle with complete peace of mind for many years to come.
  • Drivers of complex or luxury vehicles : High-end vehicles, as well as those with complex technology, are often more expensive to repair. The extended warranty therefore becomes a form of insurance against unexpected and costly repairs.
    • Example : A luxury car equipped with entertainment systems, parking sensors, and self-driving technology could require complex repairs if it breaks down. An extended warranty can cover these repairs, which could otherwise cost thousands of dollars.
  • Drivers who prefer complete peace of mind : Some drivers prefer to know that no matter what happens, they won't have to worry about unexpected costs related to repairing their vehicle. For them, the extended warranty offers additional financial security.
    • Example : A driver who has little mechanical knowledge or does not have the time to deal with repairs may prefer to pay for an extended warranty, to ensure that any possible breakdowns will be taken care of without stress.
  • Car owners with high depreciation : For vehicles that lose value quickly, an extended warranty can add residual value by reassuring future used buyers, who will appreciate the extra coverage.
    • Example : An owner looking to sell their car after a few years could make it more attractive on the used car market by showing that it is still covered by an extended warranty, which can help close the sale at a better price.

3. Specific examples of costly repairs

With the rapid evolution of automotive technologies, repairs, especially those involving electronic systems and advanced equipment, have become increasingly costly. Here are some examples where an extended warranty could prove extremely valuable:

  • Navigation and multimedia systems : In-car navigation and entertainment units are becoming increasingly complex and can cost thousands of dollars to replace or repair if they fail.
    • Example : An owner whose GPS navigation and infotainment system fails after 6 years of use could face repair costs of over $2,000. With an extended warranty, these costs would be covered.
  • Security sensors and cameras : Advanced driver assistance systems (ADAS), such as rearview cameras, parking sensors, or blind spot detection systems, are essential for safety, but also very expensive to repair.
    • Example : If a sophisticated backup camera stops working after the factory warranty expires, the replacement cost could be $1,000 or more. The extended warranty could cover this repair, avoiding an unexpected expense.
  • Complex electrical systems : Electrical systems, including seat controls, windows, or climate control systems, are also susceptible to costly failures.
    • Example : A breakdown in the air conditioning system of a luxury car could cost between Rs. 1,500 and Rs. 3,000 to repair. With an extended warranty, this cost would be covered, giving the owner peace of mind.

How to choose an extended warranty?

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Choosing an extended warranty can be a complex process, given the variety of options available on the market. To make an informed choice, it’s essential to compare offers, understand the details of the contracts, and ask the right questions before signing. Here’s a step-by-step guide on how to do it, with real-world examples to help you navigate the process.

1. Comparison of offers

The first step in choosing an extended warranty is to compare the different offers available. Extended warranties can vary greatly in terms of cost, coverage, and services included. It is important to take the time to compare several offers before making a decision.

  • Evaluate coverage : The coverage offered by an extended warranty is one of the most important aspects to consider. Some warranties only cover major breakdowns, such as engine and transmission, while others offer more comprehensive coverage that includes electronic systems, electrical components, and even roadside assistance costs.
    • Example : A driver considering an extended warranty for a hybrid vehicle might want to compare an offer that covers only the engine and transmission with one that also includes the hybrid battery, electronic systems, and roadside assistance. While the latter option is likely to be more expensive, it may offer better overall protection, especially for a complex vehicle like a hybrid.
  • Compare prices : The cost of an extended warranty can vary depending on many factors, including the length of the warranty, coverage, and vehicle model. It is crucial to compare prices while taking into account the differences in coverage.
    • Example : A luxury car owner might receive two extended warranty offers: one costing $2,000 for 2 years of full coverage, and another at $3,500 for 4 years of more limited coverage. By assessing the specific needs and risks, this owner might choose the first option if he wants more extensive coverage in the short term, or the second option if he plans to keep the car for a longer period.
  • Consider the supplier's reputation : It is also essential to consider the reputation of the warranty provider. Some third-party providers may offer cheaper extended warranties, but with lower quality services or complicated claims processes.
    • Example : An owner might choose to purchase an extended warranty directly from the car manufacturer, even if it is more expensive, due to the reputation for customer service and easy access to repairs at authorized shops. Conversely, a third-party provider with negative reviews on consumer forums might be avoided, even if they offer competitive rates.

2. What to check in contracts

Once you've compared offers and selected a few potential options, it's crucial to read the contracts carefully to understand exactly what's covered and what's not. Here are some key things to look for in extended warranty contracts.

  • Exclusions and limitations : Almost all extended warranties have exclusions and limitations. It is essential to know what is not covered to avoid unpleasant surprises in the event of a breakdown.
    • Example : A policy might exclude components that commonly wear out, such as brakes, tires, and shock absorbers, or even specific electronic systems, such as navigation units or audio systems. A vehicle owner might find that their policy excludes repairs due to normal wear and tear, meaning items like brake pads wouldn't be covered, even if an expensive repair is needed.
  • Maintenance conditions : Many extended warranties require that the vehicle be serviced according to a specific schedule, often at approved providers. Failure to comply with these conditions may void the warranty.
    • Example : A car owner who takes out an extended warranty may find that they must have their vehicle serviced exclusively at the dealership or a network of approved garages. If they have an oil change at a non-approved workshop, they risk having their warranty voided if they make a claim, which could be costly if they have a major breakdown.
  • Franchise : Some extended warranties include a deductible, which is an amount you must pay out of pocket before coverage kicks in. Check the amount of this deductible and assess whether it is reasonable compared to the potential cost of repairs.
    • Example : An extended warranty contract might stipulate a deductible of $500 per claim. If a car owner needs to replace an expensive electronic component estimated at $2,000, they will have to pay $500 out of pocket first. If deductibles are too high, they could make the warranty less attractive for frequent or minor repairs.
  • Duration and mileage : Carefully check the duration and mileage covered by the extended warranty. Some contracts end when a certain number of kilometers is reached, even if the expected duration has not elapsed.
    • Example : An owner who drives a lot of miles each year might find that their 5-year or 100,000-mile extended warranty ends well before the 5-year mark, simply because they hit the mileage limit in 3 years. So it's crucial to choose a warranty that fits your driving habits.

3. Questions to ask before signing

Before committing to an extended warranty contract, it’s important to ask questions to clarify the details and ensure you’re making the right choice. Here are some essential questions to ask.

  • What specific repairs are covered and excluded? : Make sure you understand exactly what’s covered. Exclusions can vary from policy to policy, and it’s important to know if components specific to your vehicle, such as a hybrid’s battery or navigation system, are included.
    • Example : If you own a hybrid car, you should ask if the extended warranty covers the hybrid battery, power management systems, or repairs related to hybrid-specific electrical components. If there is an exclusion for these items, you may want to shop around or negotiate more extensive coverage.
  • What maintenance conditions are required to maintain the warranty? : Ask if the warranty imposes specific maintenance conditions and which repair shops are authorized. This will help you plan your maintenance visits accordingly and avoid inadvertently voiding the warranty.
    • Example : You might ask whether you must have your servicing done at a dealership of the brand or whether approved independent garages are accepted. This may influence your decision, especially if you prefer a specific workshop for its competitive rates or proximity.
  • Is there a deductible to pay for each claim? : Ask if there is a deductible and, if so, how much it is. Make sure you understand how it applies to different claims.
    • Example : If a contract imposes a $200 deductible on each claim, you'll want to know whether that deductible applies per repair visit or per item repaired. This could make a significant difference in the total cost of your repairs.
  • What is the complaints procedure? : Find out what the process is in the event of a breakdown. How easy is it to make a claim? How long does it take to get a repair authorization? These details can affect your user experience.
    • Example : You may want to ask if repairs require pre-authorization before they begin, and how long it typically takes. If the process is lengthy or complicated, it could cause inconvenience if you need your vehicle quickly.

Conclusion

Choosing an extended warranty requires a careful evaluation of available offers, a clear understanding of the terms of the contract, and a series of specific questions to ensure you make the right choice. By comparing different options, checking contract details, and asking the right questions, you can find the extended warranty that best fits your needs and your vehicle.

For personalized advice on choosing your extended warranty and exploring the best financing options for the purchase of your new or used car, do not hesitate to contact Quebec Auto Loan. We are here to help you protect your automotive investment in the best possible way.

Commonly asked questions about; extended car warranty, is it really worth it?

An extended warranty is a service contract that extends coverage for a vehicle's mechanical and electrical repairs beyond the original factory warranty. It can be purchased when purchasing a new or used car, or at any time before the factory warranty expires.

  • Example : An owner purchases a new car with a 3-year or 60,000 km factory warranty. By purchasing an extended warranty, he extends this coverage by an additional 2 years or up to 100,000 km.

You should consider purchasing an extended warranty if you plan to keep your car beyond the factory warranty period, or if you want to protect yourself against unexpected repair costs after the initial warranty expires.

  • Example : A driver who plans to keep his vehicle for 7 years could purchase an extended warranty that covers repairs for the next 4 years, once the factory warranty expires.

No, the extended warranty does not cover all repairs. It generally excludes wear and tear parts such as brakes, tires, and windshield wipers. Additionally, some repairs may be excluded depending on the contract. Typically, a comprehensive contract will cover 95%-98% of your vehicle. This means that the contract will cover more than 15,000 parts to 30,000 parts, depending on your make and model.

  • Example : If a battery or brake pads need to be replaced, these repairs will generally not be covered under the extended warranty as they are considered normal wear and tear items.

In many cases, yes, the extended warranty is transferable to the new owner of the vehicle, which can increase the resale value of the car.

  • Example : An owner sells his car after 4 years, but the extended warranty is still valid for 2 years. The new buyer will benefit from this coverage, which will make the sale more attractive.

The cost of an extended warranty varies depending on the vehicle model, the length of coverage, and the level of protection chosen. Prices can range from a few hundred to several thousand dollars. Depending on the make, model, and year of your vehicle, the price can range from $20,000 to $80,000. Note that the more expensive the vehicle, the more expensive the warranty will be. So we can imagine that a Mercedes-Benz will cost more to protect than a Kia, for example.

  • Example : A compact car owner might pay $20,000 for a 5-year extended warranty, while a luxury car owner might pay $8,000 for similar coverage.

Yes, an extended warranty is often worth the extra cost, especially considering the high cost of parts, labor, and electronic complexity of modern vehicles. Repairs can quickly become very expensive, and an extended warranty can save you from major expenses.

  • Example : An SUV owner with a complex transmission could face a bill of several thousand dollars if it breaks down. With the extended warranty, these costs would be covered, avoiding having to pay a large sum for repairs, much higher than the initial cost of the warranty.

Failure to follow the maintenance requirements outlined in your extended warranty contract may void your coverage. The most important required maintenance is oil changes. It is very important to do your oil changes on time.

  • Example : An owner fails to perform a recommended 50,000 km oil change. If an engine problem occurs, the extended warranty may refuse to cover the repair because the required maintenance was not performed.

An extended warranty is a service contract that covers repairs after the factory warranty has expired, while mechanical insurance is a form of insurance that can cover a wider range of repairs, sometimes from the very beginning of vehicle ownership. In Canada, this type of product is not available. The only way for you to guarantee your vehicle for longer is with an extended warranty contract.

  • Example : A driver might purchase mechanical insurance that covers breakdowns due to accidents or environmental damage, in addition to mechanical breakdowns, which is not always covered by an extended warranty.

An extended warranty can be especially helpful for a used vehicle, as these vehicles are more likely to experience breakdowns due to their age and higher mileage.

  • Example : A buyer acquires a 4-year-old used car with 80,000 km. The extended warranty could provide valuable coverage against breakdowns that may occur in the following years.

Most extended warranties cover on-board technology, but it's important to check the terms of the contract, as these systems may be excluded or require additional coverage.

  • Example : An owner of a car equipped with a built-in navigation system could purchase an extended warranty that specifically includes coverage for electronic components, avoiding high repair costs if the system fails.

Yes, there are specific extended warranties for hybrid and electric vehicles, covering essential components like the high-voltage battery and energy management systems.

  • Example : An electric car owner might purchase an extended warranty that covers the battery, knowing that replacing it can cost several thousand dollars.

Yes, if your vehicle is financed with an auto loan, an extended warranty can provide additional protection to cover costly repairs, avoiding having to dip into your savings or investments to make payments.

  • Example : A homeowner with a 5-year car loan could be facing a $4,000 repair after 3 years. With an extended warranty, he won't have to pay that out of his own pocket, protecting his financial situation.

Extended warranties can last from 1 to 10 years, depending on the contract. The length of the warranty is often based on the number of miles driven or the number of years elapsed, whichever comes first.

  • Example : A driver purchases an extended warranty of 5 years or 100,000 km. If the vehicle reaches 100,000 km in 3 years, the warranty expires, even if there is time left.

Some extended warranties include additional services like roadside assistance or towing, but it depends on the contract.

  • Example : A driver with an extended warranty that includes roadside assistance could receive free roadside assistance if their car breaks down on the highway, avoiding potentially expensive towing fees.
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