1The Math
Extended warranties are profitable for sellers—which means on average, you pay more than you get back. But averages don't apply to individuals.
2When They Make Sense
Consider a warranty if:
- You're buying a used luxury vehicle (expensive repairs)
- The vehicle has known reliability issues
- You can't handle a $2,000+ unexpected repair
- You plan to keep the car past factory warranty
- The coverage is comprehensive (not just powertrain)
3When to Skip
Save the money if:
- You're buying a reliable brand (Toyota, Honda)
- You have savings to cover repairs
- The warranty has many exclusions
- You won't keep the car long enough
- You'd rather self-insure
4Read the Fine Print
Check deductibles, exclusions, where you can get service, and the claims process. Some warranties sound good until you need them.
Key Takeaways
- 1Warranties favor the seller on average
- 2High-risk vehicles may justify coverage
- 3Self-insurance works if you have savings
- 4Read all exclusions carefully
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