It is not uncommon for a potential used or new car buyer to ask
whether purchasing an extended warranty is a good idea. It is
important to understand the details of what you are purchasing when
it comes to an extended warranty.

Most extended warranties
specifically state that they do not cover a pre-existing condition
of the vehicle. This is similar to purchasing medical insurance; if
your car has a pre-existing problem when you purchased it, then an
extended warranty will not cover the repair bill when you take it
into the shop. Asking questions and digging for information about
the vehicle you are about to purchase from the sales person will
help you determine if purchasing the extended warranty is a smart
investment. Ask what, if any, mechanical problems the vehicle has
had before. Ask what kind of inspection the vehicle went through
before being placed on the lot for sale, and whether they have any
paperwork to prove that. It important to see the paperwork to know
what you are buying.

If you are at a manufacturer
authorized dealer
of the vehicle (i.e. you are at a
dealership looking at a
) the dealer will have warranty history reports on file
and can see all the mechanical repairs performed while the vehicle
was under warranty. Ask to see that as well, so you can best
understand the history of the car that you are buying. Inquire
about the
CarFax report
to see if there is a previous accident that may
void any warranty coverage.

If you don’t like the answers you are getting, then perhaps an
is not only a bad idea; perhaps the car (or
dealership) is as well. If so, and you want to purchase an extended
warranty, you are better protected.  Unfortunately, a warranty
company can still deny coverage. Most often, the reason is that the
condition must have been pre-existing. Having asked questions and
demanded the documents as stated above, you are now in a position
to be able right the wrong. You have proof that the condition was
not pre-existing as the dealership showed you a clean bill of
health in the way of inspection records, warranty history reports,
or a CarFax report. So either the warranty provider is trying to
avoid their obligation, or the dealership provided you false
information to induce your purchase; if that is the case then you
may be dealing with fraud.

How about an extended
when it comes to a new car? Some people believe that
spending the money on an extended warranty on a new vehicle is a
waste of money. A new vehicle comes with a manufacturer’s
bumper-to-bumper warranty. That’s all the protection you need in
the first few years.  If the vehicle has problems in those
years, then an extended warranty would be useless to continue
taking care of that problem. If the vehicle is repair free
throughout the original manufacturer’s warranty period, then a car
dealer or other extended warranty vendor will be happy to sell you
a new policy at the end of your warranty. 

Larry Smith