CINCINNATI - No one wants to be hit with a $3,000 engine or transmission repair when the warranty runs out on their car.
So extended warranties, or service plans, are big business: More than 50% of car buyers now purchase one, according to our partners at the consumer guide Angie's List.
And if you are buying a new or used car at a dealer, expect to be pitched on. Dealers make a nice commission on selling them.
But while they can bring peace of mind, a bad one can be a case of throwing your money away.
Angie Hicks, founder of Angie's List, said, "When shopping for an extended warranty take your time and do your research. It's an important decision because the warranty is only as good as the company that stands behind it. Don't feel pressured to buy one on the spot and make sure you understand the fine print."
Hicks says don't agree to buy one on the spot. She suggests:
- Checking the company out online for complaints.
- Reading the contract.
- Finding out what it covers, and what is excluded.
- And asking what are you required to do
"When looking at auto warranties, one thing that's important to remember is you need to do proper maintenance," Hicks said. "In some scenarios the warranty might be voided if proper maintenance isn't done."
Most plans now cost over $1,000 for 3 years of protection, so Angie says you need to do your homework before signing up.
And if you find a similar but cheaper deal online, ask your dealer if he will lower the price of the one they're offering. They may make a better deal to keep the sale.
As always, don't waste your money.
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