Extended Warranties. Yes or No?

Team-BHP believes that warranties are a true expression of a manufacturer’s confidence in its car. Standard warranties range from one to two years in India, though most cars now sold also have extended warranty plans available for a price. Are these extended warranties really worthwhile? You may be surprised, but they are. Team-BHP highly recommends you opt for extended warranty coverage.

The fact is that no matter how reliable modern cars are, their components are still expensive to replace. Unlike older model cars, it is seldom possible to repair or refurbish a broken part; replacement is generally the only option. It is not uncommon for electrical and mechanical parts to fail unexpectedly and even the pinnacle of reliability, Honda, has had fuel pump problems (worth Rs.20 000 or more) with the new Honda City and Accord. Air-conditioner compressors can cost over Rs.40 000 and defective engines and transmissions are even more expensive.

For only a couple of thousand rupees – between 0.5% - 2% of the purchase price of your car – you can buy the peace of the mind associated with an extended warranty that covers your car for up to twice the length of the standard warranty. An extended warranty is an insurance policy for your vehicle and a safeguard against expensive and unforeseen repairs.

Points to consider:

• When should you buy the extended warranty?
  We suggest starting the extended coverage with the delivery of your car. Don’t wait until later – some plans have restrictions on renewal or you may just forget.
• Is the standard coverage enough?
  If the standard warranty is for two years or 50 000 km and you plan to keep your car for two or three years and 20 – 30 000 km, then an extended warranty makes little sense. However, if you plan to keep your car for long after the standard warranty then an extended warranty is worth considering.
• What’s the reliability record of the model you’re purchasing?
• Who backs the warranty you’re considering?
  You may be buying a manufacturer’s extended warranty or an aftermarket extended warranty offered by your dealer. Knowing who underwrites your policy can help you understand the value of the warranty you’re considering: manufacturer-backed warranties score very highly when it comes to convenience and trust. Some dealers offer only an aftermarket warranty; if they do not initially offer a manufacturer warranty you should specifically for one.
• Is the warranty transferable?
  Some extended warranties end when you sell your car. A warranty that lets you transfer it to a new owner is an excellent selling point for prospective buyers.
• Can repairs be performed anywhere?
  Some contracts state that repairs must be performed at the dealership from which the warranty was purchased; this can be very inconvenient. It’s best to opt for a warranty that gives you at least a few service locations to choose from. You’ll appreciate the flexibility when your car needs work while on a road trip far from home.
• What exactly is covered?
  Know what’s covered – and not covered – with the extended warranty you’re considering. Make sure to check that the service contract covers breakdown as well as wear and tear. Before committing to a warranty, take time to explore the coverage. The differences between two plans might seem slight, but they can prove crucial.

Team-BHP feels that the relatively small cost of purchasing an extended warranty will save you money in the long run. Say “yes” to an extended warranty.