6 Ways Extended Car Warranties Can Benefit Your Customers

As a car dealer, the overall experience you provide to your customers means a lot. This starts from their first contact with you and continues well after the purchase of a vehicle. After all, if something goes wrong a few months or even a few years later, the customer may look to you for assistance. 

Cars and trucks are complex pieces of machinery. A lot can happen that no one can foresee when your customer decides to purchase, and not every customer has the financial resources to handle major repairs. That’s why many car dealers offer extended warranties as a purchase option. Here is what you need to know about these products and the ways an extended car warranty can benefit your customers. 

What Is an Extended Car Warranty?

An extended warranty offers protection that is in addition to the manufacturer’s warranty. It’s an elective contract that can be offered by the dealer at the time of sale or one that a consumer can purchase independently. 

Powertrain and Bumper-to-Bumper are two common types of extended warranties. Generally, the engine and transmission are only covered by a Powertrain Warranty. A Bumper-to-Bumper Warranty will cover all parts of the vehicle, with some exceptions. Extended Warranties don’t cover failure due to lack of maintenance for certain parts, such as brake pads, tires, or air filters. 

Many extended warranties also come with perks like roadside assistance, rental car reimbursement, travel interruption reimbursement, and other benefits depending on the contract. 

6 Ways Extended Car Warranties Benefit Your Customers

Most vehicles come with some type of warranty, so some customers might think an extended warranty is just a worthless add-on. However, nothing could be further from the truth. Here are six ways an extended car warranty can benefit your dealership’s customers.

1. Saves Money on Repairs

Most consumers wonder whether extended vehicle warranties are worth it, considering they are sold separately. After all, there are so many jokes about extended car warranties that they must be some kind of scam, right? Wrong.

What isn’t funny is when a vehicle needs repairs that aren’t covered by the original warranty. These can be costly and a financial hardship for many consumers. 

Costs for vehicle repairs can add up quickly. Assuming your customer purchases a luxury vehicle like a BMW or Lexus, a cylinder head replacement could run as high as $11,000! While repairs on domestic vehicles might be lower, a vehicle’s systems can break down over time.

As more and more parts stop working correctly, repair costs can become unaffordable. For example, a new fuel pump or water pump replacement might run around $1,500 to $1,700. An extended warranty will often cover these repairs, minus any deductible.

2. Peace of Mind

Regardless of whether your client purchases a new or used car, extended warranties are ideal if they want extra coverage or won’t be able to afford an unexpected repair. Once the factory warranty expires, it can be challenging to pay for replacement parts, necessary repairs, and labor costs without an extended warranty. 

Having an extended warranty eliminates a significant source of worry for many consumers. It also removes the troubling issue of having to negotiate terms with mechanics or fill out cumbersome paperwork. Many repair facilities will take care of this for them. 

3. Better Resale Value

If your customer decides to sell their vehicle, they’ll want to get the most money possible for it. An extended warranty ensures that the vehicle is well-maintained, so it retains its value. Some extended warranties are also transferable to the new vehicle owner for a small fee, which makes the car a more attractive purchase than one without any type of guarantee. 

4. Flexible Options

Car warranty companies increasingly allow dealerships and customers to customize their coverage according to their wants and needs. For example, more modern vehicles come with complex technology systems that could break easily. 

For car owners who can’t live without their navigation systems or Bluetooth functioning correctly, having an extended warranty that covers these systems makes sense. Drivers who don’t need these options may be able to get different coverage. 

5. Policyholder Perks

As we mentioned before, there are some interesting ways that car warranties companies provide perks to their policyholders. These certainly add value to the product and can save your customers money each year. Examples include 24/7 roadside assistance, trip protection, and rental car reimbursement for covered repairs. 

6. Add Directly to Auto Loan

As a car dealer, you can make it easy for your customers to purchase and pay for their extended warranty. The cost can be added directly to their car loan, making it a one-stop shop for this valuable service. 

Contact Titan Warranty Administration for More Information

If your dealership would like to begin offering extended car warranties to its customers, Titan Warranty Administration can make this process simple for you and your customers.

We offer limited warranty programs and flexible service contracts, all with 100% web-based delivery and claims administration. We serve franchised auto dealers, independent auto dealers, and RV dealers throughout the U.S. Contact us today to learn more about our customized products and services.