Extended Warranties: Bargain or Bogus?
This past weekend, in her Shortcuts column, New York Times writer Alina Tugend questioned whether a consumer should consider purchasing an extended warranty when buying their car. She found herself immersed in a maze of terminology, regulations and lawsuits so she sought out some advice from a few well-informed sources:
**In their annual auto issue published last April, Consumer Reports concluded that extended warranties were not a good deal. In a survey issued by the magazine, they found that 65 percent of the 8,000 readers who responded said they spent significantly more for a new-car warranty than they had for repair costs. Only 5 percent said they had a net saving, and about 42 percent of extended warranties were never used.
**For those consumers who still want added protection, it’s beneficial to wait, says Phillip Reed, senior consumer advice editor for Edmonds. One reason for this is that “when the warranty is rolled into the purchase price of the car, it is easy for (dealers) to hide the true cost you’re paying.” In most cases, you can buy an extended warranty up until your original warranty expires. This could be beneficial, because after a year, you can determine exactly how long you plan on keeping the car for. Reed also points out that it is not true that you need to take an extended warranty to qualify for low-interest financing, as some customers have been told.
**Finally, our own Craig Kimmel, lemon law attorney for Kimmel and Silverman, offers Tugend some important advice. “If it’s not the exact manufacturer’s warranty, we recommend against it.”
You can read the whole article by clicking here.
Share this post: