Car Extended Warranty

March 18, 2008 8:03:02 PM PDT
These days more people who are buying a new car are buying an extended warranty. But is it worth the thousand dollars or so?Whatever new car you buy, you'll probably get a pitch to buy an extended warranty.

A brochure for Ford's program says: "you could save the amount of the plan cost with just one covered repair!"

General Motors' protection plan promises "peace of mind for the long run."

This one for a Honda extended warranty promises "no high repair cost surprises."

But Donato Vaccaro of the Consumer Reports national research center says extended warranties are a high-priced gamble.

"We surveyed eight thousand of our readers about extended warranties purchased on new 2001, 2002 vehicles. About two-thirds of them said the extended warranty did not pay off," says Vaccaro.

The extended warranties cost on average $1,000 but only provided an average benefit of $700. That's a net loss of $300.

"42% of the people in our survey didn't use the extended warranty at all, mainly because they didn't have repairs or because the manufactures' standard warranty covered the repair."

If you're buying a new car, Consumer Reports says your best bet is to buy a vehicle with a good record of reliability, so you can skip the extended warranty.

Consumer Reports tests this year showed Honda came out on top as the most reliable brand overall.


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