Recently, I had a friend ask me about buying an extended warranty which was being offered to him at the paper signing portion of his new car purchase. Here are my thoughts about extended warranties:
- Only buy them if you are buying the car, never when you are leasing (though, the dealer would be a crook if they offer an extended warranty on a lease)
- Extended warranties ARE negotiable and the mark-up on them is incredible. I would straight up ask for $500 off the asking price and see where it takes you.
- Extended warranties are great if you plan to keep the vehicle for a very long time, however, I would only buy a manufacturer's extended warranty (such as Honda or GM or Ford) and NOT buy a dealer exclusive extended warranty or an aftermarket extended warranty. Reason being is if you buy a warranty exclusive to your local car dealership, it may only be good at that dealership, so if you move or are out of town and need to use it, chances are you won't be able to.
- Lastly, use the extended warranty as a bargaining tool. They are a high profit center for dealership so use it to leverage your negotiations on the vehicle or even the interest rate which I have mentioned in the past is also negotiable.
Happy Buying!