Reasons to Buy
Reasons to Buy an Extended Warranty Sooner rather than Later
Just like car insurance protects you from unexpected expenses caused by accidents, a vehicle service contract protects you from unexpected expenses caused by mechanical failures. One out of three vehicles experiences some failure in a typical year. The average extended warranty holder will make 4 to 5 claims over the life of the agreement. If a component of your vehicle fails after the factory warranty has expired, nothing can protect you from repair costs that can quickly reach the thousands!
Another problem we see is many vehicle owners putting off needed repairs until they feel they can afford the cost of the repair. But this delay frequently results in additional damage to the vehicle, even creating unsafe driving conditions.
These are the facts: risk of component failure and associated repair expense increases with your car's age and mileage. On top of everything else, modern cars are extremely complex and contain a multitude of electronics, sensors and computer chips that need to be replaced due to failure. It is true that engines and transmissions are more reliable nowadays (not perfectly reliable, of course); now it's these other hi-tech parts that fail the most. As vehicles grow more advanced, associated repair costs are predicted to continue rising.
How auto repair costs keep going up
As you weigh your options on buying an extended warranty for your new or used vehicle, it's important to realize that coverage costs respond in a "cause and effect" way to rising parts and labor costs. The warranty price that you shop for today is determined by the price of today's auto repair costs for today's vehicles in today's economy. Given the astronomical jump in the price of oil recently and how this factor influences all aspects of the global economy, it may be wise to lock in a fair coverage package backed by a solid provider while your dollar's purchasing power is still relatively strong.
You might not know that labor rates have risen by up to $20 an hour in the past years. But if you buy your extended warranty now, you can lock in tomorrow's coverage at today's rates. To put another way, if you wait until your manufacturer's warranty expires before you buy more warranty, you'll be paying more at that time for the same coverage you could buy today, because warranty prices will have risen considerably between now and then. For example, if it costs $2500 today to repair a failed engine, you can bet it'll cost hundreds more in five years. And you can bet the warranty you would buy then versus now is going to reflect that significant inflation-driven difference.
Also, consider this very important fact. An older car costs more to put under warranty than a newer one. As your vehicle accrues mileage and wear and tear, it's at a greater risk to need more service, but warranty providers are going to charge you more to take on that risk. Likewise, if you have more factory warranty remaining on your car rather than less, you'll be eligible for a lower rate when you shop for an extended warranty than if you wait until it's all gone.
In conclusion, this much is very clear. An extended warranty can potentially save you thousands of hard-earned dollars over the life of your term, and buying today can save you even more in the long run.