auto

Straight talk on extended warranties

But keep in mind, an extended warranty starts the day you purchase it, not the day the old warranty expires. So you'll be stuck with double warranty protection that you don't really need for a couple of years. If you do say yes to the warranty, this Bankrate article will give you nine questions you need to ask about the contract.

Two types of warranties

There are two key types of extended warranties: those backed by the car's manufacturer and those offered by independent companies, also known as aftermarket warranties.

An extended service contract backed by an auto manufacturer is probably your safest bet. These contracts encompass a wide range of repairs and services. The repairs can be done at any authorized dealership and tend to be approved without a hitch. You won't pay a penny for approved repairs unless your contract includes a deductible.

An extended warranty from an independent company could cost half as much as an extended service contract from a manufacturer. But the quality of this kind of contract varies widely from company to company. Shop carefully. Ask about the repair network -- how many garages are authorized to do repairs and in what parts of the country? If there's not an authorized garage in the area, will they reimburse you for repairs at the nearest facility?

Warnings on warranties

There are tons of really crummy extended warranty offers out there. Be leery of unsolicited offers that arrive by mail or e-mail. Only do business with a company you know and trust. One good source for an extended service contract is your credit union.

With an aftermarket warranty, you may have to pay for the repair upfront and then wait to be reimbursed, which could take weeks. Be sure to ask about the reimbursement process before signing on for an aftermarket warranty.

Some dealers may try to sell you a dealer warranty instead of a manufacturer's warranty. Often, with a dealer warranty, all the repairs and services on the car have to be done at a single dealership, theirs. So if you have car problems while traveling out of town, you may be out of luck. Ask how the warranty would handle repairs when you're out of the area. If they're not covered, steer clear.

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