An extended car warranty can help protect your investment once the manufacturer’s warranty expires. They can get expensive though, and not everything from your original warranty will be covered.
Extended warranties, also known as vehicle service contracts, cover manufacturer defects and specific issues on new or used cars after your original warranty expires.
When you purchase a new car, the manufacturer will generally issue a warranty to guarantee the car won’t break down within an agreed-upon period of time – usually up to 3 years or 60,000 km – and that you won’t have to cover the cost if it does. These warranties are limited and generally only last a few years. An extended warranty covers you for a certain amount of time or number of miles after your limited warranty expires. The typical time of extension is between 4 and 7 years.
Extended warranties can be offered directly by a car manufacturer or by a third party. While third-party warranties can sometimes be cheaper, you could be putting yourself at risk if you purchase a warranty from a company that isn’t trustworthy.
Some scammers will call car owners claiming to be representatives of a car dealership or manufacturer and try to sell you an extended warranty in an attempt to get your personal information. These callers may know your name, address and even your car’s make and model, making them seem legitimate.
The average cost of an extended warranty is usually between $1,000 and $2,000. However, how much you ultimately pay depends on your car manufacturer and whether you purchase it through an authorized dealership or a third-party warranty company.
You have three options when it comes time to purchase an extended car warranty:
Extended warranties are generally separate from a manufacturer warranty on a new car, which means that not everything from your original warranty will be covered.
Typical exclusions for extended warranties include:
You may also need to prove that you’ve taken proper care of the vehicle in order for a repair to be covered, and some warranties may come with deductibles or coverage caps.
To find a trustworthy extended warranty that fits your needs, follow these five steps:
While “lemon laws” don’t explicitly exist in Canada, you still have some protection against car defects even without an extended warranty. The Canadian Motor Vehicle Arbitration Plan (CAMVAP) is an auto program that provides arbitration between a car owners and manufactures. Participating in this program, however, means that you pretty much give up your right to go to court and the arbitrator’s ruling is binding. If the arbitrator rules your favour, the manufacturer will buy back the vehicle or pay to repair it.
An extended warranty can help protect your investment and get you back on the road if your car breaks down. But it can be pricey and may not be worth the cost depending on what it doesn’t cover, so it’s a good idea to compare the costs against additional insurance coverage or paying for repairs yourself.
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