The Three Must Haves

In today’s economy, many car owners are choosing to hold on to their car, truck or SUV as long as they can. The cost of a new car is just too prohibitive. But older vehicles also have big expenses because they are more prone to mechanical failure.

Fortunately, there are extended warranties, or vehicle service contracts, that work like car repair insurance. These are not technically insurance, but provide for the repair of your car like car repair insurance. Pay a single fee up-front, while the car is still under manufacturer’s warranty, and they will cover the expensive repair bills during these higher-risk years.

The news is littered with stories about companies that won’t honor their repair commitments when the time comes. Don’t let that happen to you. Here are a few guidelines to help you separate the good from the bad extended warranty firms.

1. Look for a Reputable Company with the Following

• A physical address. ALL reputable administrators, or companies that administer and pay your repair claims, will have their office address on their website. You should Google it and if they’re legitimate, the address should bring up the company name.
• A Better Business Bureau ranking of an A or B. A high ranking from the Better Business Bureau is far more telling than testimonials or other "marketing" materials on the internet, which can be easily manipulated.
• Language that does not include "Bumper to Bumper". While this is a common term in the industry, it is inherently misleading. Disclaimers should follow any use of it in conversation, and it should never be seen on a contract.

2. Reputable Companies Let Your Review Your Contract Before You Buy

A reputable company will allow you to review your exact contract before you commit to buy. If a company tells you it’s a sample contract and “yours will be just like it”, run away fast.

3. Look for a Company That's Been Standing Behind Its Product for Many Years

These firms:

• Will offer a 100% Money Back Guarantee within the first 30 days (provided no claims have been made). Then, they will return the pro-rated portion of the unused contract.
• Should have longevity in the business – 20 years or so – and a track record of happy customers.
• Backed by an insurer with an A or better rating from A.M. Best. The insurer maintains the funds necessary to pay for the repairs covered by your contract.

Elaine Giancola from Ramsey, New Jersey knows first-hand about the benefits of this option purchased through EasyCare®, a leading provider of repair coverage. She offers:

“We were traveling through Vermont when we heard a funny noise in the car. We called for assistance and were directed to a Mazda dealer who was 10-12 minutes away. Just 45 minutes later, the claim was approved, the car was repaired and we were back on the road. We were actually already in the process of buying an additional Mazda 6 at that time, and we definitely made sure that we had an Extended Protection Plan through EasyCare on our new car.”

A little homework on the front-end can make an extended warranty for your vehicle a smart buy. Be an informed consumer and maximize your purchasing power.