The first thing one toils over after buying a car is whether or not to purchase a new car warranty. There is no one-size-fits-all answers to this question, and every car owner must take into account their comfort levels with extended car warranties.

There are three types of warranties. First, a new car warranty is for vehicles still under the original manufacturer’s warranty, extending it up to 4 years. An assured warranty is for used vehicles up to eight years old and were driven less than 120,000 kilometers. Lastly, a used car warranty offers the most limited coverage, typically only cover up to $2,000–3,000/claim if the vehicle is more than eight years old or has been driven more than 120,000 kilometers.

Here are the reasons why an extended car warranty makes sense and is beneficial:

1. Guaranteed repairs
Since tune-ups and maintenance is always required by a car, extended warranties make repairs affordable. Since there is no way of knowing how much the repairs will cost and when they will be needed, this is the most practical reason for purchasing extended car warranties.

2. More comprehensive coverage
If the question on your mind is “When there’s a dealer’s warranty, why go in for another one?”, the answer is that such warranties are typically extremely limited. This essentially means that a huge chunk of the repairs required will either be covered only to a certain extent or not at all.

3. Peace of mind
Peace of mind and security are two more benefits of extended car warranties. With extended warranties, the hope is that one never requires the coverage, but when the unexpected happens, it becomes extremely imperative and one is glad to have invested in that safety net. In an unstable economy that exists today, it is important to have such warranties and not spend your hard-earned money or worse yet, your savings on this.

4. Savings
Extended auto warranties offer substantial savings akin to financing potential repairs at below cost. What’s more, one might not have to pay anything out of their pockets, making the repairs cost the monthly premiums one pays for their warranty.

5. Increased resale value
Last but not least, one of the biggest reasons that car warranties are favorable is that their presence augments and increases the resale value of the car. When one first buys the car, it is hard to imagine that they would ever want to sell it in the future. However, as time passes, they might decide that they want to upgrade to a newer model. If and when that time comes, offering extended warranties as part of the cars’ package is a great and unique selling point. Not only does it provide the same protection which was attractive to the original buyers, but it also indicates to the potential buyer that the vehicle was, in all likelihood, maintained well too. The presence of extended warranties could tip the scales in favor of the seller, sealing the deal.