Extended Service Agreement/Warranty


(Extended Service Agreement)

The pro and cons….should you buy it?

Greetings from the Hemet Car Guy,

You ask, “Should I buy an extended warranty on a car purchase”?

Actually only the manufacture can offer a warranty, however, there are many choices to purchase an “Extended Service Agreement” aka SVC.


With an extended SVC, that provides the proper coverage, you are basically insured against all sorts of nasties that could wrack up thousands of dollars in repairs. In the long term, this can save you more money than if you pay out of pocket for those repairs.

The peace of mind you get from knowing that you are guarded against that rainy day should not be underestimated. It is human nature to believe that the long shot of bad luck will never happen. Unfortunately, it is almost inevitable that it eventually does happen down the road. An extended SVC covers that long shot for an additional period of time, hopefully until you are done with the car. No one likes nasty surprises.

Extended SVC’s make very decent bargaining chips at the table if you decide to sell the car. Of course, the SVC has to be transferable; it is something you should take into consideration when you purchase the extended SVC in the first place.

The perks that come along with some SVC’s are icing on the cake like covered rental car, towing and discounted maintenance.


If your car does not break down during the period or duration of the extended SVC, your money is wasted. Extended SVC’s are a lucrative business for companies selling them.

This suggests that ultimately they pay out a lot less in repairs than they take in. Extended SVC’s cover additional time/miles where breakdowns are more likely to occur, and are proportionately more expensive because of it.

That said, companies still feel extended SVC’s are a profitable business or they would not keep offering them. This tells you something about the odds.

There’s also a bit more hassle at the contract table, trying to figure out what every last word in the contract means and just how deep your coverage will be and how much you will have to pay if you sign the dotted line. No doubt, there are plenty of warranty companies who deliberately word contracts to leave loopholes the size of barnyards for them to wriggle through. Be sure to double check a company’s reputation at the Better Business Bureau or Consumer Reports for comments and ratings from other consumers.

Also, keep in mind not only who backs the Extended warranty,  but also the dealership selling them. The dealership is the customer of the extended SVC: the dealer can at times call the SVC to get an exception for their customer when there is a shade of gray.

Here is a big tip. In many cases the longer the policy the lower the cost per year. For example, they may offer a 2 year/24,000 mile SVC for $1995.00 and a 5 year 100,000 for $2,300.00.  The second is a much better deal, especially if it can be cancelled at any time and prorated for a refund.

Don’t be afraid to ask questions and also keep in mind that, by law, you have a right to a full refund within 30 days after you buy it.

Hope this helps.

Good Driving,

The Hemet Car Guy

For more information go to www.hemetcarguy.info

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