Many new car owners are faced with the decision of whether to purchase an extended warranty for their new vehicle or not. To help make the decision a little easier, let us first define what an extended warranty is.

An extended warranty is designed to protect the owner from repair costs after the original new-vehicle warranty has expired. They can sometimes be called a service contract, vehicle service agreement, or extended service agreement.

These extended warranties typically allow customers to have repairs made to their vehicle, typically with little or no deductible, for an additional period after the original factory warranty runs out. They act as security against unexpected vehicle repairs and ensure that these repair costs are covered without having extra financial stress.

Along with repair benefits, many extended warranties offer other services such as car rental discounts, towing, lost-key services, and trip benefits that can help finance unexpected expenses if you are far away from home and your vehicle breaks down.

Many warranties are transferrable to future owners as well. This helps both the buyer and the seller, as it may increase resale value, and it also gives a peace of mind to the future buyer. Transfer fees for extended warranties are usually minimal.

If you are on a fixed budget and don’t want to be surprised by expensive repair bills, an extended warranty may be ideal for your vehicle. This is especially true if you plan to keep the vehicle longer than the original manufacturer’s warranty.