The Truth about Buying Extended Warranty

There are lots of places where the salesperson will try to sell you an extended warranty after you buy a car. There has been talk that the reason that the salesperson wants to sell you the extended warranty is that the commission on those sales is about 50%. So pretty much the amount of money you pay for the extended warranty is only worth half the price. There have been stories about the companies that sell these warranties will do everything possible to avoid covering damages by using terms on the warranty that are not clear and could be answered in a lot of ways. There was also an incident where an extended warranty was sold and there was an issue with the car and then the company was bankrupt. Extended warranty is pretty much an insurance coverage, even when the dealer sells it to you they are being covered by the insurance policy. The insurance company has a contract with the dealer. The best advice for extended warranty is for quality cars such as Honda or Toyota, we are better off without the warranty and try to save our money by putting it in the bank. For some luxury cars that require a lot of maintenance are breaks down a lot such as Mercedes or Jaguar, I would recommend asking for a warranty from an authorized dealer with a clear written policy. These cars are luxurious, they are not as good of quality compared to Toyota or Honda and they are expensive to fix. Then again now we know about the big expense of these cars with poor quality compared to the price of the car we might just not buy these cars in the first place. At the end of the day the extended warranties benefits the salespeople and hurt the customer, when we think about it and ask ourselves this question, if it was a win for us and a loss for them would they offer it to us? The answer is no.