8 Pros and Cons of Extended Car Warranties

Your initial manufacturer’s warranty doesn’t last forever. Once it runs out, you’re responsible for the repairs on your car, which can be costly. Sitting in a waiting room drinking stale coffee while a mechanic tries to identify the cause of that weird rattle or strange smell emanating from beneath the hood is no fun. Will you be able to swing the cost or will you need to sell a kidney? Opting to purchase an extended warranty can alleviate that anxiety and ensure you hold onto both your kidneys. Here’s what you need to know about extended car warranties and why they may be a good choice for you.

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What is an Extended Car Warranty?

An extended warranty is more accurately described as a “service plan.” Think of it as if you’re prepaying for maintenance. It offers coverage for repairs after the initial manufacturer’s warranty runs out, or sometimes covers things that a traditional warranty won’t. Unlike the original bumper-to-bumper or powertrain warranty that comes with a new vehicle warranty, you will have to pay extra for this extended coverage. How much extra depends on the car you buy and the warranty terms you choose. While the coverage offered by an extended warranty is often similar to the initial vehicle warranty, it’s rarely exactly the same. There’s also a good bit of flexibility with the ability to customize the extended warranty to your preferences.

An extended warranty provides peace of mind. It reduces the chance you’ll have to pay for unexpected repairs and sell that kidney, but it’s not a necessity, nor is it right for everyone. You must weigh the costs of the warranty, how easily you can pay for unexpected repairs as they arise, and how long you plan to keep your car before deciding to buy an extended warranty.

Pros of Extended Car Warranties

  • Customization: While initial manufacturer’s warranties cannot be customized, extended car warranties are another story. They can offer the flexibility to add and remove items to create a warranty that’s a better fit for your needs and your budget.
  • this is the text of your list itemReduced Repair Costs: Instead of having to open your wallet every time your car needs fixin’, an extended warranty covers many of those costs. This eliminates the need to suddenly come up with cash when a major component breaks.
  • Done at the Dealership: While you don’t have to buy an extended warranty at the dealership when you buy your car, you can if you want to in order to simplify the process. If you know it’s something you want, getting it squared away before you even take possession of your car crosses it off your future to-do list.
  • Keep Your Car Longer: Unexpected car repairs that creep ever higher are often what defines the moment when you decide to purchase a new car. An extended warranty keeps repair bills lower and can help make staying in your current car longer more affordable.

Cons of Extended Car Warranties

  • Not All Repairs are Covered: Just like with the initial warranty, not everything is covered with the extended warranty. Routine wear and tear, including tires, aren’t a part of the deal so check carefully to see what is and isn’t covered.
  • You May Never Need the Warranty: You purchase car insurance knowing you may never actually use it and the same is true of an extended car warranty. While it has the potential to save you money if there are big repairs, know that it’s also possible you’ll never even use the warranty.
  • Cost: An extended car warranty isn’t free and the cost can add up. The more you pay, the greater the benefits offered, but you never know just how often you’ll use the warranty if at all. A tight budget might not allow for much of an extended warranty.
  • this is the text of your list itemYou Can’t Always Use Your Mechanic: While you can use whoever you like for non-warranty work on your car, the terms of many warranties require you use an authorized repair center if they’re covering the cost of the work. It’s a good idea to confirm what you can and can’t have done before the repair work is completed.

Should I Get An Extended Warranty?

The answer isn’t the same for everyone. If you are worried about paying for repairs after your initial warranty runs out, especially if coming up with the cash to pay for repairs on short notice is a challenge, then an extended warranty could be a good call. We created a decision tree to help you figure out if an extended warranty is right for you.

Those who drive long distance and quickly rack up lots of miles may also benefit from an extended warranty. If you hit the initial mileage limits quickly, then the extended warranty can help defray repair costs that could happen while your car is still relatively new.

On the flip side, if you’re comfortable with the idea of paying for repairs as they happen and aren’t particularly worried about finding the cash, then an extended warranty might not be a good idea. This is also true if you don’t drive much, which means you’re going to have years before the initial vehicle warranty runs out and even then might not have put enough miles on your car to warrant many repairs.

Keep in mind that an extended warranty doesn’t cover everything. Whether or not you choose to purchase one, there will be repairs and maintenance costs that need to be factored into your budget.

Top Rated Warranty Companies

4.9 of 5

CARCHEX is one of the largest, most highly-rated providers of vehicle extended warranties in the market. They have been a trusted name in the business for 20 years.

4.9 of 5

autopom! is well known in the industry for customer service and responsiveness. The company works directly with 2600 certified repair facilities and has a dedicated customer advocacy program.

4.9 of 5

Liberty Bell has one of the best reputations and covers more vehicle makes than other warranty companies. This provider has a solid reputation with excellent customer service ratings and has been around for over a decade.

4.3 of 5

Toco Warranty Corporation is a relative newcomer in the industry, but they are making a splash. They maintain a solid reputation with an A+ rating from the Better Business Bureau. Toco is known for offering affordable plans with no down payment and the ability to pay in monthly installments.

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FAQ

Are extended car warranties worth the cost?

They can save on costly repairs and offer peace of mind if you’re worried about the cost of repairs blowing your budget. Just remember that there’s always the chance you won’t need the coverage and could have saved more by not paying for one in the first place.

What is the best extended car warranty to purchase?

There are lots of extended car warranty providers that offer flexible plans at a wide range of prices. You can purchase directly through the dealership or you can choose to purchase from a third party. Choose a warranty that you can afford and that offers coverage of the items that concern you most.

How much is an extended car warranty?

The cost can vary widely. It all depends on your car and the warranty you select. Plan to pay anywhere from $350-$750 a year.

What does an extended car warranty cover?

An extended car warranty is often quite similar to the initial manufacturer’s warranty, but it’s likely not exactly the same so read the fine print. You can customize an extended warranty to cover the things that concern you most so don’t be afraid to ask for something different if what is offered doesn’t fit your needs. Wear and tear items are not a part of warranty coverage.

Do I have to buy an extended warranty at the same time that I buy my car?

No. It’ll be offered, but you can absolutely decline. You can buy an extended car warranty at any time before the initial manufacturer’s warranty expires.

Can me or my personal mechanic do warranty work?

While you or your personal mechanic can work on your car without voiding your warranty, work that is covered under the warranty is different. Some only cover the costs of warranty work if it’s done at an authorized repair center, so double check before the repairs are done.

Editor's note and disclaimer: Car Talk is supported by our fans, readers and listeners. When you click on some of the links on our website, we may receive referral compensation. However, you should know that the recommendations we make are based on our independent editorial review and analyses.
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