Analyze
your driving miles-per-year, how long you plan to keep the vehicle and what the
factory provides in terms of coverage. With a three year/36,000 factory warranty,
your estimated annual mileage would help determine if you will be protected the
entire three years. Another important consideration is the manufacturer's reputation in terms of general quality and reliability.
In
looking at the three year/36,00 example, if you drive approximately 15,000 miles a
year, your factory warranty would reach 36,000 miles approximately in the 28th
month of vehicle ownership. This would leave
you “exposed” unless you buy a service contract to supplement the factory
warranty.
To
determine if you should purchase a service contract, decide how much you are
willing to pay for repairs at this point of your ownership of the vehicle
weighed against the reasonable cost of coverage for a service contract.
Given
the diagnostic technology dealers and repair shops use, electronics coverage
under a service contract may be an option to consider. Most vehicles are hooked
up to diagnostic machines to troubleshoot certain areas of the vehicle. These
types of service contracts could cost about $30 to $50 a month, which drivers
can adapt to easier than a one-time big repair bill when they are not ready for
that expense.
The
worst case scenario is a driver having a car payment plus a $1,500 repair bill
when he or she may be on a tight budget. With a service contract, the worst
case scenario is a $100 deductible out-of-pocket expense.
When
buying a used vehicle, service contracts come in certain levels of coverage. For
example, one level of coverage would be powertrain, air conditioner, seals and
gaskets. There are different levels of coverage. There are different mileage
increments such as coverage for 100,000 miles, 125,000 miles and upward.
It
is good to buy vehicle protection products that have coverage in the U.S. or
Canada in order to have work done to the vehicle. The selling dealer can
usually initiate the claim online.