The conventional wisdom on the extended warranty is that it’s a waste of money, but that comes from decades ago, and the fact is that the environment has changed quite a bit. Cars are lasting longer and longer, and the possibility of extending your warranty is starting to seem like a smart one.
But who should you buy an extended warranty from, a car dealer or a third party?
Negotiate with the Dealer
Like many aspects of the car-buying process, the purchase price of an extended warranty from the dealership is a negotiable one. While it will ultimately depend on the dealership’s willingness to determine just how much they can negotiate—some may not be able to alter the warranty’s price, for instance—many of them are more than happy to have you signed up for a longer warranty. It means more protection for you and a bigger sale for them.
If you can negotiate the price of your warranty down, that’s ideal, but what can you do if that’s not an option? One of the most common techniques we’ve seen is negotiating your new car loan with the purchase of a warranty. We have had drivers who have gone from 1.9% APR to 0.9% APR and lower simply by negotiating with the finance team at the dealership. That amounts to long-term savings.
Feel free to get creative; maybe you can engineer a way to get your auto maintenance taken care of for a few years or free detailing. You can’t know if you don’t try.
As with much of your car-buying experience, the dealer is not likely to tell you that this is negotiable, but you should try your best to haggle with them anyway. After all, what do you have to lose?
Going Third Party
We generally advise our readers against third-party extended warranties, if only because it takes much of the buying power out of your hands, but if you’re looking for extra confidence in the longevity of your vehicle and you’ve already taken it home, it’s still a smart option.
Just remember, like with buying an extended warranty from the auto dealer, you’ll want to do your research and make sure that you’re getting the best deal you can, especially since you won’t be able to negotiate.
May 30, 2014 by Jamie Rettig