Do You Really Need An Extended Warranty?
Most manufacturers offer at least 3-year/36,000-mile bumper-to-bumper protection on their new products. In addition, many offer extended warranty coverage on engine and powertrain components and limited warranties on certified used cars. In most cases, these plans offer consumers excellent protection. But if you drive more than 12,000 miles per year or plan to keep your vehicle for a long time, then an extended service plan might offer the kind of security you are looking for. According to Ann Tomlanovich at DaimlerChrysler, "many consumers choose to purchase extended bumper-to-bumper warranties to match Dodge's free 7-year/70,000-mile extended warranty plan. This guarantees that consumers won't have to pay for repairs for at least seven years or 70,000 miles." Tomlanovich also went on to state that roughly 30 percent of consumers are purchasing extended warranties-up considerably from past years. Keep in mind that it is less expensive to purchase the plan while the vehicle is still covered by the manufacturer's warranty. If you wait for the bumper-to-bumper warranty to expire before looking into and extended plan, then you will pay considerably more. Most of these plans are self funded and insured, so the earlier you pay, the lower your rate. If you think of an extended warranty as a security blanket then you might not mind paying money up front to avoid a large repair bill in the future. Consumers also need to look into the reliability history of their automobile. Some models with higher-than-average repair histories might necessitate an extended warranty. Also, consider the cost of parts. Many domestic models have repair costs that are half that of imported models, making an extended warranty appealing to owners of foreign cars.
Assess What You Have
To get the right vehicle at the best price, it's important to do your homework before starting to shop. Begin with the basics. Decide how much you can afford and how much you are willing to pay before you shop for a vehicle. If, like most consumers, you have to borrow money, shop for a loan before you shop for a vehicle. Calculate what you'll have to pay each month, including interest. For instance, if you borrow $10,000 for 4 years at 8 percent interest, your monthly payments would be $24.41 times 10, or $244.10. Borrowing that same amount at 8 percent for 3 years would raise the monthly payments to $313.40 ($31.34 times 10). Keep in mind, too, that you'll probably need a down payment of about 20 percent (in the example above, about $2000), unless your trade-in is worth that much. The total of your loan, down payment, trade-in, and any factory rebate will have to cover the price of the car, as well as fees and sales tax. Your bank or credit union can discuss loan options to help you set a realistic price range that fits your means and budget. Buying a new car is a financial stretch for many consumers and out of reach for quite a few. Many have turned to used cars and others to leasing, hoping to avoid a hefty down payment and lower their monthly payment. As greater numbers of consumers wind up in bankruptcy or with insurmountable credit problems, even a used car becomes difficult. Credit-challenged customers are consigned to the rank of sub-prime buyers, who are obligated to pay interest rates far higher than the norm -- assuming they can get credit at all.
