Extended warranties

Definition

Extended warranties are service contracts that provide repair and maintenance coverage beyond the standard warranty period. They are often offered by car dealerships or third-party providers to cover potential future mechanical issues.

5 Must Know Facts For Your Next Test

1. 1. Extended warranties typically cover major repairs after the manufacturer's warranty expires.
2. 2. The cost of an extended warranty can be paid upfront or rolled into your car loan payments.
3. 3. Coverage and terms can vary widely between different extended warranty plans.
4. 4. Some extended warranties require a deductible for each repair claim.
5. 5. It is crucial to read the fine print to understand what is and isn’t covered under an extended warranty.

Review Questions

• 1. What is the primary purpose of purchasing an extended warranty for a car?
• 2. How can the cost of an extended warranty be managed in relation to your car loan?
• 3. Why is it important to read the fine print of an extended warranty contract?

Related terms

Manufacturer's Warranty: A standard coverage provided by the car manufacturer that typically lasts for a certain number of years or miles, covering defects and some repairs

Deductible: The amount you are required to pay out-of-pocket before your insurance or extended warranty covers the remaining costs

Service Contract: An agreement purchased separately from a product, providing additional maintenance and repair services beyond the initial guarantee