Are New Car Extended Warranties a Good Buy?
We have talked to many people who have purchased extended warranties for their cars, trucks and RVs. Extended warranties, which are really service contracts, fall into two categories--the good and the bad. The good are those products backed by manufacturers--the GM Protection Plan, the Ford ESP and EXP, the Chrysler Protection Plan and Toyota ExtraCare plan. The bad are all the rest--those plans backed by companies you have never heard of. These companies exist to deny claims. When your car needs an expensive repair, these companies will be sure to blame your lack of maintenance and see the problem as pre-existing your purchase of the vehicle which the fine print excludes from coverage. Plus, the extended warranties do not cover the parts of the car that most often fail--the electronics. Dealers love to sell these warranties because they are so profitable. Bottom line--we do not recommend any extended warranty unless backed by a manufacturer.
When shopping for any extended warranty, the buyer should negotiate the price. There are no standard prices. Check the Internet for dealers offering the extended warranties at favorable prices.
Finally, it is important to know that extended warranties do not give the buyer lemon law rights. The California Supreme Court decided this issue a few years ago (Gavaldon v DaimlerChrysler).
