Propickup Digital Magazine
Issue link: https://read.dmtmag.com/i/93583
MONEYMATTERS WARRANTIES EXTENDED A By Robin Walton, CPA n inevitable part of owning vehicles is the cost of maintenance and repairs. There's no way around it, so spend- ing time evaluating cost-cutting measures is worth it. One area to look at is vehicle repairs and the viability of "extended warranties. An extended warranty is a service con- " tract that covers repairs and/or maintenance for a defi ned period of time or up to a certain mileage on a vehicle. It's a form of insurance to cover potential large repairs in the future. If you have a new vehicle that is covered by a manufacturer's warranty, and you don't plan to keep it beyond the factory new- vehicle warranty limits, then you probably aren't interested in such coverage. But if you are looking at keeping your pickup beyond the manufacturer's warranty period, then an extended warranty may benefi t you. HISTORY AND HABITS In deciding if you need an extended war- ranty, consider the reliability history of your particular vehicle. You can often predict some types of repairs will be needed by a certain age or mileage level and weigh the costs of such repairs to the cost of the ad- ditional service coverage. Also look at the cost of parts for your vehicle. Drivetrain repairs, for example, are much more expensive on a heavy-duty diesel 10 PROPICKUP February 2012 than on a half-ton gas pickup, which can make an extended warranty more attractive to cover the diesel. In addition, how many miles do you put on your truck annually? Most service contracts cover you up to a certain mileage, which could put you out of warranty quickly on a vehicle that is on the road for long distances. So you defi nitely need to factor in annual mileage to fi gure out if you will get your money's worth on the service contract. Your company vehicles are likely a critical component of your business, which means an expensive repair will not be something you can put off . Therefore, if cash fl ow is tight, you might be a good candidate for an extended warranty to cover those big, unexpected repair bills. QUALTIY COVERAGE Make sure to check out the company you are buying the service contract from to protect your investment. If you go with the vehicle manufacturer's plan, you will be dealing with a long-term company with a solid track record. That's not to say plans off ered by third- party providers are all bad. You will fi nd some great deals from independent provid- ers, but you need to be careful and do your