If you’re buying a brand new Lexus or Toyota, then chances are you won’t need an extended warranty. If you’re buying a Pontiac or a Jeep, then it’s a toss-up and you may end up breaking even with the purchase of an automotive warranty. If you’re buying a flashier-but-less-reliable Mercedes-Benz, then you should consider a warranty, according to Consumer Reports. You can buy these warranties online or at a dealership, but there are many things to look for prior to purchasing. The most important thing is that you relax, research and not allow yourself to be pressured into anything.

Did you know that an auto salesman can make more money from selling you an extended warranty than selling you the car? The most profitable part of the retail auto business is, in fact, the extended automobile warranty, where anything over the dealer’s cost is profit. Generally speaking, salesmen get a flat fee for each warranty sold, plus the balance of the profit. The fees can range from $250 to $1750, and when compared to third party warranties, dealership plans cost, on average, 40% to 100% more.

Another factor to consider is auto warranty for “wear and tear.” This type of warranty can be hard to find, since many only cover mechanical failure. However, you can definitely find extended warranty coverage that includes “wear and tear,” thereby covering parts like the idler arm, piston rings, U joints, CV joints, wheel bearings, motor mounts, suspension bushings, tie rod ends, seals, gaskets and other engine parts that gradually wear down and may or may not cause a mechanical breakdown. If you have an anti-lock braking system, then you’ll want to make sure your coverage extends to ABS and instances of overheating. The comprehensive website, carbuyingtips.com recommends Warranty Direct and Nation Warranty Corporation, which both include “wear and tear” in their plans.

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This entry was posted on Thursday, August 21st, 2008 at 3:41 pm and is filed under Automotive. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.