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Advice

First published: 14th July 2015

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Advice

Should I take out an extended warranty?

When the new-car warranty on your car expires, you have several options if you want to continue with cover.

First published: 14th July 2015
For a relatively young car, perhaps the most obvious option is to extend the car’s original warranty, but bear in mind that these often only cover cars up to a certain age or mileage; and, in some cases (particularly if the warranty was long to start with), the option to extend doesn’t even exist. Beyond that, you can consider taking out cover from companies like Warranty Direct or Warranty Wise.

As ever, the devil is in the detail, so check the fine print of any policy before you sign up. For instance, the company may offer more than one level of cover, or the level of cover may vary depending on the age and mileage of your car. You may also need to pay for extra add-ons – covering articles such as the air-con or airbags – to get the cover you want. Likewise, if you’re sizing up rival policies, check you’re comparing like with like.

Essentially, any warranty is a form of insurance policy, so you can expect the price of the policy to vary in line with the expected reliability of your car, as well as its age and mileage.

The question for most people will be whether a warranty is a worthwhile expense – after all, if nothing goes wrong with your car, it’s effectively a pointless expense. However, given that Warranty Direct’s research shows that 40% of cars need some work in their fourth year, and that taking out a policy makes it easier to budget, as well as hopefully avoid any unexpected big bills, it does make a lot of sense.

Looked at another way, what you’re essentially doing is putting a price on peace of mind, and it’s up to you to decide how much that is worth.
Related topics: Buying a used car