Best Extended Warranties for Used Cars 2021

Extended warranties -- alternatively called service contracts -- are designed to act as a sort of HMO for your car. You pay a monthly fee as a kind of insurance against catastrophic failure in your vehicle. If that failure happens, depending on which kind of plan you have, you’ll be reimbursed for the expense of fixing it, less whatever deductible you agreed to when you signed the contract.

Extended warranties may seem like a waste of money when you’re buying a new car. After all, most people don’t keep cars more than about five years, and those brand new cars are generally protected by bumper-to-bumper and powertrain warranties anywhere from three to 10 years and mileage between 36,000 miles to 60,000 miles.

But what about a used car, especially a used car that’s beyond the time or mileage specified by the original vehicle warranty? What about a used car purchased not from a dealer, but a private party? Is it possible and/or advisable to take out a service contract on those vehicles?

The answer is yes, and there may be good reasons to do so.

Best Extended Warranties for Used Cars 2021

  • CARCHEX - Most variety in plan options
  • Endurance - Best direct service contract provider
  • Ally Flex Coverage - Solid across most car brands
  • Chrysler Warranty Direct - Best for Chrysler/Jeep/Dodge/Ram vehicles
  • GM Extended Protection Plan - Best for GM vehicles
  • Honda Care - Best for Honda vehicles still under factory warranty

Why A Service Contract Can Be Important in a Used Car

The short answer is that many American consumers don’t have the money to pay for a major service. Here’s why:

Used car prices were all over the place in 2020, thanks to the pandemic and the impact on consumer spending. Prices tanked in April, but then rebounded to higher levels than ever in October, according to the Manheim Used Vehicle Index, the product of auction values at Manheim sites around the country. In 2021, there’s no reason to expect that the median price for a used car is going to be much less than $20,000.

That’s a major investment that’s becoming more challenging in 2021, as consumers struggle with rent, unemployment and all of the other expenses required for survival. . That means they’re taking out bigger and bigger loans to pay for the cost of the car. American consumers are financing -- on average -- more than $19,000 for used cars, and they’re doing it for 48 or even 60 months.

A $20,000 note for five years on a car that is within 18 months of being completely out of warranty -- even with the supplemental warranties offered by CarMax and manufacturer Certified Pre-Owned Programs -- is a major gamble. A $19,000 car loan with a 3.11% APR for 60 months is $342 per month. Tighten that loan to 48 months, which most banks are going to want to do with higher mileage or older vehicles, and that payment rises to $421 per month.

The last thing you want to do when you’re paying $421/mo on a car loan is to have to worry about paying for a $4,000 transmission rebuild completely out of pocket. That’s the benefit of purchasing an extended warranty on a used car.

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Age and Mileage are the Keys to Extended Warranties on Used Cars

Finding out exactly how old your vehicle can be to qualify for a service contract can be tricky on a lot of extended warranty websites. The Mopar-backed vehicle protection plans offered by Chrysler Warranty Direct have the details spelled out pretty clearly in the FAQs: To qualify for a traditional pre-owned service contract, your vehicle has to be a model year that is less than 10 years old, and the vehicle has to have less than 125,000 miles.

Mopar also offers a different type of extended warranty for vehicles that have gone through its Certified Pre-Owned program. You can purchase a service contract that extends the benefits of the Certified Pre-Owned program as long as you sign up before the vehicle reaches 80,000 miles, and as long as the Certified Pre-Owned Limited Warranty is still in effect.

Most of the other vehicle warranty providers are going to offer used car warranties for those vehicles that are 10 years old or have 125,000 miles or fewer, as well. The difference between the Mopar or GM warranties and others provided by third parties is that they don’t have the Certified Pre-Owned component.

Best Warranties for Used Vehicles 2021

Chrysler Warranty Direct

These warranties are only for FCA (Chrysler, Dodge, RAM, Jeep, Alfa Romeo, Fiat), vehicles. If you’re driving a used vehicle from one of those brands with less than 125,000 miles, it’s probably a good idea to at least get a quote.

Chrysler Warranty Direct is a direct provider, meaning that while they’re selling you a contract, they’re also administering the contract when things have gone wrong with your vehicle.

The Mopar Vehicle Protection plans it sells use only OEM parts to service your vehicle, meaning that when it leaves the garage, it will have the same quality parts it left the factory with. Finally, all of the work performed is at authorized, franchised FCA dealerships, by technicians trained by the factory.

There’s a specific plan for Pre-Owned Vehicles offered by Chrysler Warranty Direct, so be sure to contact CWD to determine whether or not it’s the coverage you want for your Mopar vehicle.

Pros and Cons

  • Factory authorized parts
  • Factory trained service techs
  • More expensive than some
  • Requires service at a Chrysler/Jeep/Dodge/RAM dealership

GM Extended Protection Plan

Similar to the Chrysler warranty, GM Extended Protection Plans cover GM vehicles (Chevrolet, Buick, GMC and Cadillac) and extend the coverage of the bumper-to-bumper warranty. You can get a plan on any traditional used car, however, original warranty coverage still has to be in effect to qualify, meaning that it’s going to be a used car that is fewer than three years old -- for Chevrolet and GMC -- or four years old -- for Buick and Cadillac. Those vehicles will need to have less than 36,000 or 48,000 miles, depending on the brand.

With a GM Extended Protection Plan in place, you don’t need to carry paperwork or special membership cards. Using your vehicle identification number, any authorized GM dealership in the country can access your plan level and provide services using their factory-trained technicians, and service your vehicle with GM-specific parts. The plan comes in two levels, Silver and Platinum. Silver is an affordable plan that covers major components like the engine, transmission, transfer case, drive axles, factory-installed turbo- or superchargers, steering components, brake components, electrical system components, factory air conditioning components and seals and gaskets.

Platinum offers everything in the Silver plan, but adds essentially an extension of the factory’s bumper-to-bumper coverage, protecting you from expenses related to failures in items like the entertainment system, rear vision camera, blind spot monitoring system, adaptive cruise control, and anything else that isn’t a normal wear item.

In addition to the vehicle protection, the plan includes several built-in benefits:

  • Rental Car Coverage – Up to $40 per day, with a maximum benefit of $280 per repair visit.
  • Towing and Roadside Assistance – Up to $150 per occurrence.
  • Trip Interruption – In breakdowns that occur more than 100 miles from home, the plan reimburses you up to $200 per day for meals and lodging, with a maximum of $800 per occurrence.
  • Lost Key and Lockout – If your keys are lost, stolen, broken or locked inside the vehicle, the plan reimburses up to $35 for locksmith services.

Pros and Cons

  • Factory authorized parts
  • Factory trained service techs
  • More expensive than some
  • Requires service at a GM retailer

Honda Care

Like the GM and MOPAR plans, Honda Care is only for Honda vehicles, and utilizes that brand’s dealer network as its base for servicing vehicles covered by the plan. You can’t buy a Honda Care plan from some fly-by-night company on the internet, and you can’t buy the plan for a Honda vehicle that’s out of the original factory Honda Warranty period. But if you did buy a Honda vehicle that had some time and miles left on the original warranty, Honda Care is your best bet.

Honda doesn’t call this an “extended warranty.” It calls it what it is: a service contract, meaning that you’re paying a lesser rate up front to perform services that you might need at some point in the future. Especially if you’ve rolled that into your original used car loan, it can be a way of protecting yourself against the financial unpredictability of unforeseen mechanical issues.

Honda sells several varieties of these plans, so you want to do your research before understanding which one is right for you. We’ve covered the plans in detail here.

Pros and Cons

  • Factory authorized Honda parts and service
  • Honda authorized service techs
  • Only available for vehicles with time left on the original Honda warranty
  • More expensive and less flexible than other options

Ally Flex Coverage

You can cover just about any brand of car with Ally Flex Coverage, but it has to be newer than 2016, and has to have fewer than 60,000 miles. It’s also important to note that it’s a reimbursement plan. If something fails that’s covered by the plan, you submit the receipts and Ally reimburses you for the expense.

While not as convenient as some of the other plans, there are a handful of benefits to consider. The price of a plan like this should be lower than that of a factory-backed plan. Also, you aren’t restricted to using a dealership’s service department. As long as the repair has been authorized, you can use any mechanic you like. If you have someone you trust in town and the dealership is three towns away, that can be a great benefit. It also provides the use of new, used and remanufactured parts.

Ally Flex Coverage comes in three flavors: Tech Coverage provides covers only for a number of advanced technology features such as collision avoidance systems, factory-installed GPS, backup sensors and adaptive cruise control. Core Coverage is more like your original “powertrain” warranty, covering things like the engine, transmission, drive axles, transfer case and brakes (with the exception of pads, rotors, drums, shoes and other wear items). Ultra Coverage is an extension of your manufacturer’s bumper-to-bumper coverage.

Like the other plans, there are also some significant side benefits to Ally Flex Coverage:

  • 24/7 Roadside Assistance
  • Rental Vehicle Coverage
  • Trip Interruption Prevention (not available in Kansas)

Pros and Cons

  • Coverage for just about any brand
  • More flexibility in where you can service your car
  • Vehicle must have fewer than 60,000 miles
  • Vehicle must be from 2016 or newer

CARCHEX

If your car doesn’t fall into one of the brand-specific service contract companies, check out CARCHEX. They offer service plans for all brands, both new and used. They also have an A+ rating from the Better Business Bureau, meaning that they respond to whatever complaints they get, and they’re probably not hounding you on the phone late at night.

Carchex is a service contract broker, so within every tier of their coverage, they have several offerings from third party vendors that can meet your needs. For example, at the highest level, (Titanium Coverage) Carchex offers plans from six agencies that run from seven to 10 years worth of coverage. You’ve also got a paradox of choice going on with Carchex. They have 21 different plans ranging from Titanium, Platinum, Gold, Silver and Bronze.

For used car owners, you can pretty much eliminate the Titanium and Platinum plans, unless the used car you’re buying is a Range Rover and you don’t care about money. The Titanium plan covers just about everything, but as such, it’s going to be really expensive. The Platinum plan is a “stated coverage” plan, meaning that it covers only a list of specific items. That list is long, though, and this protection is going to be costly, too.

You probably also don’t want the bottom-of-the-barrel Bronze coverage, either. It’s less costly, but it only covers the car for five years, versus seven in all the other plans.

The appropriately named “Gold” plan is the Goldilocks of Carchex plans, offering a balance of reasonable cost and coverage with a long seven year term.

In addition to the service contract coverage, the plans also provide some added benefits, such as:

  • 24/7 Roadside Assistance
  • Towing
  • Rental Car coverage
  • Gas Delivery
  • Trip Interruption protection

Pros and Cons

  • A+ rating from BBB
  • Service plans for just about any vehicle
  • Over 20 different plans to choose from. Tough to determine which is right
  • No factory backing

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FAQ

Who has the best extended warranty?

That depends on which brand of car you drive. If you drive a Honda still protected by the original warranty, a Honda Care service plan is your best bet. If you have a higher mileage vehicle, CARCHEX is a decent option.

Are extended warranties worth it?

If you’re good at saving money, no. An extended warranty or more accurately, a “service contract” is really for people who want to protect themselves against financial unpredictability. If you have the cash set aside for emergencies, you’re much better off using that than spending money on a service plan that you may never use.

Does AAA offer extended warranties?

No.

How old can my car be to qualify for an extended warranty?

That can be anywhere from 10 years (for a qualifying Mopar Vehicle Protection plan) to just four years (in the case of Ally’s plan).

What is the mileage limit for extended warranties?

Check with the plan provider, but we saw mileage as high as 125,000 miles, and as low as the limits of the original warranty (36,000 miles).

Are there deductibles with extended warranties?

Yes, it definitely depends upon the plan. Some plans have $0 or $100 deductibles for newer vehicles with fewer miles, but others have $500 deductibles for higher mileage vehicles.

What’s the average cost of an extended warranty?

Choose a mid-level plan on a less-than-exotic car, and a service contract will cost around $1,500 to $2,000.

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