The Case for Extended Warranties on Used Cars

Audi Q7 interior

Caution: Don’t use the cupholders

Buying a used Audi seemed like a great idea at the time.

I found the 2008 Q7 on a dealer’s lot and used the CarGurus price analysis tool to determine that the car was a good value. I was smitten with the Audi’s color, strong stance, room for 7 people and pre-installed roof racks. The car was everything I needed, and I was able to negotiate a price significantly lower than the asking amount.

With 88,000 miles on the clock, I figured I had some time before things started going wrong. I was correct in that now I have 98,000 miles and a repair bill that is making me second-guess my choice.

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When Extended Warranties Pay Off

2007 GMC Acadia

An extended warranty might be a good idea

About 4 years ago a family member bought a used Lexus, along with an extended warranty contract that covered the car for 5 years and an additional 60,000 miles.

The contract cost about $1,200 and was quickly forgotten once the paperwork was completed.

Meanwhile, my brother purchased a 2007 GMC Acadia, and an extended warranty. Before the ink even dried, his transmission failed, and the warranty more than paid for itself by covering the repairs. Other issues on the Acadia have come up since, and the warranty covered them all.

With my brother’s warranty set to expire, he’s preparing to sell the car rather than risk more repairs.

The Lexus has been flawless for many years, until this month, when it began running hot and experiencing other problems. The car was in the dealer’s shop before the warranty was remembered. With just a few thousand miles left on its coverage, it paid for a new radiator.

There’s lots of advice out there that says to skip extended warranties, but experience says they’re worth it—when done right.

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You’ll Want an Extended Warranty After Reading This

2011 GMC Acadia

How much does peace of mind cost?

While there is no specific answer, many people use the “peace of mind” reasoning to justify purchasing a new car instead of a used one. There are simply fewer unknown factors when buying new. There are no previous owners, no potential hidden damage, no abuse and no chance the car was previously totalled. Plus, the warranty on new cars gives buyers the ability to sleep easy at night, knowing they are covered for at least a few years in the event of a catastrophic failure.

Buying used offers none of those guarantees. Even late-model used cars can suffer tremendous breakdowns and cost thousands of dollars to repair. No one knows this better than my brother, the once-proud owner of a 2007 GMC Acadia.

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