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A warranty is nothing more than a service contract that guarantees the company will pay for repairs. It's known that cars over three years old have 50 or more problems for every 100 or so vehicles. And often times the repairs are through the roof. The newest cars are the most expensive to fix as could be expected. and the price for repairs just keeps increasing.

We are talking hundreds of dollars if not a couple of thousand that can come up unexpected.

So any expensive repair can actually cost almost as much as the warranty itself or even more. Plus with warranties, you have such added coverage as roadside assistance, car rental, towing etc. You also get a higher resale value should you decide to sell the car.

Knowing the right warranty for your vehicle, can save you time, aggravation, and money.
Manufacturers are required to cover factory installed parts for defects or workmanship. It's the law! New cars come with two warranties. Basic, and power-train. The basic covers components that are not subject to wear and tear. Brakes, belts, hoses, filters wiper blades, tires and so on. As the basic warranty ends, the power-train part starts, and just covers engine, transmission, drive shaft,and axles.
Its usually a 36 month or 36,000 miles or even 60 months or 60,000 miles.

Extended warranty providers says if a part or component described on the policy breaks, or wears out in some cases, the warranty company pays to have it fixed.
Although companies that provide extended warranties are governed by Federal and State laws, they vary from state to state, and are backed by insurance companies to ensure they meet their obligations.

However, do not worry about getting that extended warranty until your manufacturers begins to run out. Why pay interest on the amount it costs when you can get it later on. Do read your contracts carefully so that you fully understand what you coverage you really have.

Learn more about this author, Richard Serra.
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