If you are in the market for a car, you might be considering a “new-to-you” car. After all, buying a used car can be a great way to save money as even a two to three-year-old used car can cost as much as half a new car.
You can thank depreciation for the savings. But one primary concern when buying a used car, even one which has been well maintained, is the cost of significant repairs. Fortunately, many used vehicles still have the original warranty, but this coverage might run out within a year of buying the car.
As such, many buyers turn to extended auto warranties to get added protection for their cars. This sort of coverage is getting a lot of attention from car owners and with good reason. As the economy slows and the state puts in place requirements for new cars, many buyers turn to used cars and a more economical choice to get around.
However, buying additional coverage does require understanding the ins and outs of both “mechanical breakdown coverage” and “vehicle service contracts.” They are very different offerings, and an excellent place to start would be an article we found, which can give you some more information on the differences between the two and the coverage options. You can check out this article here: https://gogetolive.com/can-you-buy-an-extended-warranty-for-a-used-car-in-california/
How Extended Warranties Differ from Manufacturer’s Warranties
While most manufacturers offer extended coverage, for the sake of the reader, we will be comparing the differences between the warranties which come with a new car, the “manufacturer’s warranty,” and an extended warranty or coverage option you get from a third party.
These forms of coverage can be quite different, with many manufacturers offering a bumper-to-bumper warranty option for new cars – even it is only for the first year or so of use. Also, when you are buying a used car, the original warranty already has time on it. As such, the bumper-to-bumper coverage might have run out, and content on the engine and the transmission may also be coming to an end.
This is where an extended warranty can come in handy. You are purchasing additional coverage for your vehicle to handle the cost of significant repairs, such as the engine or the transmission. While you can get additional coverage from the manufacturer, many opt for third-party policies. They tend to be less expensive and more flexible in terms of the coverage options.
But an extended warranty is not the same as the original manufacturer’s warranty. Instead, you should think of it as an insurance policy. But unlike the comprehensive coverage you have your vehicle, this coverage will pay for repairs – even if the car is not in an accident.
What Are the Options?
It turns out there are three options when considering to extend coverage on your car. The first is an extended warranty, then you have Vehicle Service Contracts (VSC), and the last option is mechanical breakdown insurance.
Depending on where you live, you will want to check with the Department of Insurance to find out more about extended warranties in the state. This is important as the rules in some states draw an extremely strict distinction between who can offer a warranty. As such, check with the regulators and do your homework as the “warranty” you are offered might not be enforceable where you live.
As for a VSC, these can be offered by the dealer or other third parties. While the function is similar to that of a warranty, these offerings are not regulated in some states. So, you should read the fine print and ask a lot of questions before opting for this type of agreement.
Then you have Mechanical Breakdown Insurance (MBI). As it sounds, this form of coverage will help to pay for repairs of major mechanical items in your car. In some cases, you can get content for vehicles up to 11 years old, and with more than 140,000 and the older your used car is, the more you should consider some additional protection.
Unlike VSCs, many states regulate MBIs. While this does not mean that the protection will meet your exact needs, it does mean that the government is overseeing the industry to make sure that unscrupulous companies are not preying on buyers of used cars. Also, you can get MSC from a variety of sources, not just the dealer. This includes banks, credit unions, directly from online vendors, or from your insurance agent.
With the economy in a state of uncertainty, and more buyers considering a new-to-them car, rather than a new car, extended auto warranties are being noticed. If you are considering buying a used car, then you should consider this form of coverage as well.