The Two Types of Extended Warranties


Depending on your vehicle’s age and condition, how much you drive, and the size of your budget, you’ll want to decide on the type of extended warranty that’ll best suit your needs.


An extended warranty is always a good idea. It can prevent serious, unforeseen expenses from draining your bank account in a hurry. There are two basic types of extended warranties – those delivered via the vehicle’s manufacturer, and those backed by an independent company. The latter is often referred to as an aftermarket warranty, and is a sound choice for most drivers today. Let’s take a look at the benefits of each option:

* A Vehicle Service Contract (VSC) is often referred to as an “extended warranty,” but it is not a warranty. A VSC does, however, provide repair coverage for your vehicle after the manufacturer’s warranty expires. A VSC is a contract between you and a VSC provider or administrator that states what is a covered repair and what is not.

Let’s first look at cost – as that’s probably the biggest consideration most consumers weigh when opting in or out on the extended warranty.


It is widely known that automotive dealerships (they sell the manufacturer backed warranties) make huge profits on the extended warranties they sell. There’s a reason why they do it during the financing stage of the sales process, too. It’s easier to convince you when you’re more focused on your new vehicle and want to leave the dealership.


Extended Warranties Save Money


Dealers are also often able to renegotiate financing terms to offer a lower interest rate if the buyer selects the warranty. This falsely lowers the perceived cost of the warranty, while in actuality it can end up costing double or triple the original amount when you consider compound interest.


The bottom line: An independent warranty provider is often able to format an extended warranty that provides the same or better coverage than the dealership’s offering, at about half the price. Plus, you won’t pay interest on the warranty if you aren’t financing it along with the car.


Next, consider the terms: Most dealership warranties have strict mileage limits, as in, they won’t cover repairs once the mileage hits a certain mark. Independent warranty administrators, though, are often able to tailor a warranty plan to vehicles that have high mileage or are more than a few model years old. To fully understand the warranty plan, you’ll want to consider the following:


Coverage for car bills

  • What is the deductible amount?
  • What are the mileage/vehicle age restrictions?
  • Is the warranty able to be cancelled at any point?
  • Do you pay the bill upfront and then file for reimbursement?
  • What is covered and what is considered “normal wear and tear?”
  • What kind of pre-authorization do you need to have repairs covered?
  • Can you pick your own mechanic?


The bottom line: These, and other questions, can help you determine the flexibility factor with either warranty type. An aftermarket warranty can be tailored to the driver’s needs, while most manufacturer-backed plans are pretty formulaic.


Another consideration to make it – what do you do if you want an extended warranty, but you either already own the vehicle or are purchasing one from a private party? In this case, the aftermarket option is the only real route to take.


When you consider the greater variety of warranty plans, the flexibility in terms and conditions, and the lower price point, most drivers today would benefit from opting for an aftermarket warranty versus the high-pressure, “tacked-on” warranty pushed through most automotive dealerships today. For more information about affordable extended warranty plans for virtually any vehicle on the road today, contact the experts at CarSure.

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