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Extended warranties for vehicles

Extended vehicle warranties fall into two classes: manufacturer or factory warranties and third-party warranties. Even though manufacturer warranties are generally more expensive, they're recommended over third-party warranties for several reasons.

Manufacturer's warranties, the typical three-year, 36,000-mile ones that come with your new car purchase are fine. But sometimes extended warranties rarely live up to their name. They often fail to extend much of the coverage you enjoy under the manufacturer's warranty, or they overlap your manufacturer's coverage.

Atlanta-based consumer advocate Clark Howard said if you consider an extended warranty on a vehicle:

  • CONSIDER ONLY ONES SOLD BY THE MANUFACTURER OR BY YOUR INSURANCE AGENT - It should actually extend, like its name implies, your manufacturer's warranty coverage or at least add new protections beyond three years and 36,000 miles.
  • NO THIRD-PARTIES - Howard said third-party warranty companies are flighty. Sometimes, they go out of business before they can pay your claim.
  • PRICE IS NEGOTIABLE - Bet you didn't know that! Howard recommended getting a quote from your car's manufacturer or dealer, then get another from your insurance agent. Compare them and work them against each other.
The best extended warranties for used vehicles include a dealer's "certified" used car program. Those often include warranties that are backed directly by the dealer, instead of some risky third-party. 

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