Monday, March 13, 2006

Smart Extended Warranty Deductible Decisions

Extended auto warranty plans frequently offer consumers a wide, and often confusing, range of deductible plans. Beware of companies that offer too many choices. The best plans are usually the simplest.

Remember, warranty costs are based on a few simple principles. The make, age and mileage of your vehicle are the most important. Therefore, watch out for companies offering you multiple deductible options. More than likely, these plans include complicated "frill" options that the salesperson knows you are unlikely to need or use. However, you will be paying for them.

Also, be sure to ask if the deductible applies to each "repair" or each "visit". A per repair deductible means that if your mechanic find three problems during one visit and your deductible is $200, you will be charged $600. That is simply a rip-off.

Choosing the right deductible for you should be a simple mathematic consideration. It is a lot like playing the odds. For example, if it costs $500 to go from a $100 to a $0 deductible, you only save money if the car is repaired less then 5 times. However, if a company is offering you a zero deductible for $200, that means that you will save money if the car is repaired more than twice. That is a much better deal.