Top 5 Things To Know About Extended Car Warranties

You’ve probably heard that buying the extended warranty on anything is a waste of money. In many cases, that might be true, but in some cases it’s a great idea. Buying a car is one of the largest purchases that many people will make, so it’s a real bummer when they have to shell out even more money to keep it running.

Extended warranties can offer peace of mind and, of course, a financial safety net that can prevent big-dollar repair costs as the vehicle ages. Understanding whether or not the vehicle warranty is a good call for you, and learning the ins and outs of how they work is difficult. That’s why we’ve put together this quick guide to get you started.

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What Are The Key Things To Know About Car Warranties

1. Who Guarantees The Warranty?

Third-party warranties are great on paper, but they don’t mean much if nobody’s willing to back it. Make sure that your vehicle warranty is backed by the automaker or by a national independent body. If it’s only backed by the dealership, there’s a chance it is only valid at that location. If your warranty covers additional services, such as rental cars or towing and roadside assistance, be sure that you’re clear to use it everywhere as well.

2. How Much The Warranty Will Cost

You may love your dealer’s finance and insurance (F&I) manager, but they are in business to make money. Instead of trying to fumble through research on your phone while you’re sitting at the dealership, spend time understanding how warranties are priced before heading in to buy your car. The F&I manager may have an approved list of warranties that his dealership works with and there may not be much wiggle room in what you’re expected to pay. If you find your own warranty coverage at a more acceptable price, don’t feel bad about turning them down at the finance desk.

3. What Is And Isn’t Covered

The only way to understand what you’re paying for is to READ THE CONTRACT. About 113% of the complaints about extended warranty companies are due to the fact that consumers never knew what they were paying for. Pay attention to what you’re getting in the vehicle warranty. Common wear items like tires, oil filters, wiper blades, and more are typically not covered by warranties because they are designed to wear out over time. Some warranties are offered with tiers of coverage, which means that the lower level packages don’t have the expanse of coverage that the top-level or “gold” warranties cover. This is important because you can’t typically change your coverage after the fact, so it’s a big deal to get it right the first time around.

4. Do You Actually Need The Warranty?

If having a warranty will ease your mind and make your driving experience much more enjoyable, by all means go ahead and get one. The thing to remember is that, in many cases, the extended warranty is not worth the money. If you’re buying a car with a significant portion of the factory warranty remaining, strongly consider that adding coverage won’t be worth the coin. New cars are becoming more reliable every year, so do your research to avoid wasting money.

5. How Long You Will Keep The Vehicle

If you’re planning on driving a car until the wheels fall off, an extended warranty might make sense. Over time, repair costs can add up, especially toward the end of a vehicle’s useful lifespan. On the other hand, if you’re the type of person that changes cars every couple of years, the warranty might not be worth it. There’s no sense in buying long-term coverage for a car you only plan on owning for a couple of years. However, you may want to look at the transferrability of the warranty. If you’re going to sell the car in two years and you have a five year warranty, find out if the warranty is transferrable to the next owner. If it is, the cost to do so is usually nominal.

What to Consider Before Deciding on a Warranty

At the end of the day, the decision to buy an extended warranty is completely up to you and how you feel about the long-term chances of your vehicle causing problems. Consider that many newer cars have factory warranties that extend to as long as ten years, and also remember that many people never even end up needing the warranty coverage they purchased. Peace of mind is priceless, though, so don’t let us steer you away from a product that will make you feel better.

Is an Extended Warranty Right For You?

People who buy vehicles and keep them for a long time, or who tend to buy brands from companies with spotty reliability ratings, will benefit greatly from the coverage of an extended warranty. It’s a huge bonus for people buying luxury and exotic vehicles, because the costs of repairs for those vehicles can skyrocket as they age.

What is the Cost of an Extended Warranty?

Extended warranties cost anywhere from around $500 to $5,000, depending on the coverage, the vehicle, and other factors. Basic warranties are on the cheaper side, while comprehensive warranties cost more. Warranties on luxury car brands like BMW, Range Rover, Audi and Mercedes-Benz are going to cost A LOT MORE, sometimes double what a warranty might cost for a more mainstream brand.

And be sure to understand the deductible. Some warranties are offered with $0 deductible. Some can be up to $500. It’s important to know that before you show up to the repair shop and learn that the warranty is only going to pay out $12 after you’ve covered a $500 deductible. READ THE CONTRACT.

Is An Extended Car Warranty Needed for New and Used Cars?

If you’re buying a new vehicle that needs an extended warranty, it’s probably time to shop for a different vehicle. Almost every new vehicle comes with at least a few years of warranty coverage and some offer warranties that stretches to ten years of powertrain coverage. Extended warranties make much more sense for used cars, especially if they’re at or past the expiration date of their factory warranties.

What is the Difference Between a Car Warranty and a Vehicle Service Contract?

Even though some dealers call service contracts and warranties by the same name, they’re not technically the same thing. A service contract can be put in place at any time, and always costs extra, regardless of factory or aftermarket warranty products already covering the vehicle.

Pros and Cons of Getting an Extended Warranty

  • Can cover used vehicle
  • Can prevent expensive repairs
  • May offer additional services such as roadside assistance and towing
  • Can be expensive
  • Not worth it for every driver
  • Coverage options can be confusing

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.

4.3 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.


Who Offers The Best Extended Warranty?

This will depend largely on the coverage you need and the vehicle you drive, but there are a few companies that consistently receive high ratings for their service. Endurance, CarShield, and CARCHEX are all at the top of the pile

Can I Buy An Extended Warranty Later?

You can purchase a warranty after existing coverage expires, but the costs will go up as your vehicle ages. In some cases, it can be more cost effective to buy the warranty ahead of time if you expect wanting or needing it down the road.

Does My Credit Card Offer Any Coverage?

It might, but you’ll need to check with your credit card company. Some auto insurance companies offer auxiliary services as well, but it’s up to you to do the research.

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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