Should You Get An Extended Warranty?
An extended car warranty can offer you peace of mind if you’re worried about costly or unexpected repair costs once your manufacturer’s warranty expires.
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Key Points:
- An extended warranty can protect your wallet from costly or unexpected repair bills in the event of a mechanical breakdown.
- If you plan on driving your car beyond the time limits of its manufacturer warranty, it may be worth considering purchasing extended coverage.
- It’s wise to compare car warranty quotes and plans from multiple providers. This way, you’ll find the right plan at the best price possible.
If your new car came with a three-year/36,000-mile manufacturer’s warranty that’s about to expire, you may be considering an extended warranty to help cover unexpected repairs. But is an extended warranty really worth the investment?
In this article, we’ll take a look at different types of extended car warranties, the factors that affect cost, and ultimately whether extended protection is right for you. We’ve also included reviews of some of the best extended car warranty providers, so you can shop for a protection plan that gives you the best possible coverage and peace of mind.
An extended car warranty refers to mechanical breakdown coverage offered by a vehicle manufacturer. However, this term is often mistakenly used to describe coverage from third-party companies. Independent providers offer similar protection through vehicle service contracts, but we’ve used the terms interchangeably in this article for convenience.
What Is An Extended Warranty?
Extended warranties are optional protection plans you can purchase from either a dealership or a third-party company. These plans are designed to pick up where your car’s original factory warranty coverage leaves off. An extended warranty covers repair costs after a mechanical breakdown caused by defective car parts or faulty workmanship.
Extended warranties are also known as vehicle service contracts. Some auto insurance companies offer similar protection plans known as mechanical breakdown insurance (MBI). Many extended warranty companies also provide this insurance to customers in states like California, which has strict laws concerning the sale of extended warranties.
You can pay for extended warranty coverage like many other big purchases–by making monthly payments, or by simply paying for it upfront. In addition to paying for the protection itself, you will likely have to pay a small deductible when using coverage for repairs.
What Is A Bumper-To-Bumper Extended Warranty?
Bumper-to-bumper car warranties cover exactly what they suggest–most vehicle systems and parts between the front and rear bumpers. This protection is similar to a manufacturer’s warranty, and is considered exclusionary because it covers everything on your car except exclusions specifically listed in your contract. Bumper-to-bumper coverage is usually the most expensive type of plan due to the comprehensive protection it offers.
What Is A Powertrain Extended Warranty?
Powertrain warranties are typically cheaper than bumper-to-bumper warranties. This is because they only cover parts associated with your car’s powertrain–like the engine, drive axles, transmission, and more. These types of warranties are inclusive, meaning what’s covered will be explicitly listed in your contract.
What Are Other Common Types of Extended Warranties?
Many extended warranty providers offer a mid-level coverage plan in between bumper-to-bumper and powertrain. It provides more protection than a powertrain plan, but less than an exclusionary plan. Typically, mid-level plans cover the powertrain with a few added elements, like air conditioning and electrical components.
What Does An Extended Warranty Not Cover?
An extended warranty won’t cover everything on or associated with your car. There are exclusions that are standard across the industry, which include but aren’t limited to:
- Routine maintenance, such as oil changes and tire rotations
- Wear and tear parts like brake pads and batteries
- Improper vehicle maintenance
- Damage from car accidents
- Environmental damage
Is An Extended Car Warranty Worth It?
Buying an extended warranty can be a gamble–investing in an extended warranty gives you peace of mind and provides coverage in case of a mechanical breakdown, but you may not end up needing it. So if you think you can save money and not buy an extended warranty, know that you risk paying a lot more out of pocket if your car breaks down.
See the table below for some pros and cons of extended warranties.
How Much Does An Extended Warranty Cost?
Our research team gathered quotes from some of the most popular extended warranty providers in the industry to better understand average costs for protection plans. Through this research, we found that the average car warranty costs $977 per year of coverage. If you’re looking for a further cost breakdown by warranty type, see the table below:
| Extended Warranty Type | Yearly Coverage Costs |
|---|---|
| Exclusionary | $1,005 |
| Mid-Level | $937 |
| Powertrain | $953 |
Keep in mind that there’s no one-size-fits-all answer when it comes to the cost of warranty. There are many different factors that play a role in the cost of an extended vehicle warranty, including:
- Age of the vehicle
- Mileage of the vehicle
- Buying from a dealership versus a third-party provider
- Vehicle year, make, and model
- Level of coverage
- Number of high-tech components in the vehicle
- Driving habits and routine vehicle maintenance
- Chosen deductible
Common Car Repairs And Costs
Owning a car is expensive. You already pay enough for car insurance, fuel, and regular maintenance, like oil changes. You don’t want to worry about the unexpected cost of expensive repairs. Without an extended car warranty, these are some common repairs you may face and would have to pay out of pocket, according to data from RepairPal.
| Repair | Average Cost |
|---|---|
| Catalytic Converter Replacement | $2,224 to $2,309 |
| Fuel Injector Replacement | $644 to $784 |
| Mass Airflow Sensor Replacement | $239 to $346 |
| Ignition Coil Replacement | $213 to $295 |
On top of common repairs, there’s always the chance that your car could experience a larger issue. For example, you might need to replace your transmission, which RepairPal estimates could cost you between $5,266 and $5,469.
How Do Extended Warranty Deductibles Work?
Both car dealership and third-party extended warranties come with a deductible, which is the amount of money you’re responsible for paying on a covered repair.
If your deductible is $100 for a covered repair that will cost a total of $2,000, you would pay $100 toward the mechanic’s fee, while your warranty covers the remaining $1,900 repair bill.
Note that your actual deductible will depend on the provider and warranty plan you select. Some third-party providers offer plans with deductibles as low as $0 that require nothing out of pocket when your car needs a covered repair. Keep in mind that, usually, the higher your deductible, the lower your monthly premium, and vice versa.
Dealer Extended Warranties Vs. Third-Party Warranties
There are plenty of good reasons to purchase a car from a dealership, but your extended auto warranty doesn’t have to come from a car dealer. In fact, dealership vehicle service contracts often come with both restrictions and added costs. Dealership warranty limitations may include:
| Limitations | Details |
|---|---|
| Increased total cost | Dealerships offer extended warranties with a high retail markup. A warranty that costs $1,200, for example, might cost $2,500 from a dealership. |
| Hidden interest | A dealership extended warranty often involves rolling the cost into your car loan. This might seem like a convenient way to pay for your warranty, but you’ll end up paying interest. This could add potentially hundreds of dollars to the cost of your extended warranty over the life of your auto loan. |
| Limited repair shop options | An extended warranty from a dealer requires you to have covered repairs completed by the dealership. You may be able to go to another dealer of the same automaker, but this still greatly limits your repair options. |
| Limited coverage options | Most dealership extended car warranties are limited in plan options. Generally, your coverage choices include a comprehensive plan, an intermediate plan, and a basic powertrain plan. |
| Vehicle restrictions | You won’t find a dealership-backed warranty on older, used vehicles or ones with higher miles. Sometimes, dealerships don’t offer extended warranties once the manufacturer’s warranty expires. This means a dealership plan probably won’t cover your car with 100,000 miles. |
Your search for the right extended protection should also include reputable third-party warranty companies. Unlike a dealership-branded service contract, a third-party warranty can offer flexibility in coverage and benefits like your choice of repair facility. Here are some of the top perks of third-party extended warranties:
- Flexible pricing and payments: Third-party warranty companies offer a range of coverage and pricing to fit almost any budget. A third-party service contract also won’t have the markup of a dealership contract. Most warranty providers offer monthly payment plans, but third-party contracts won’t have the added interest of an auto loan.
- Choice of repair shop: You won’t be limited to a dealership service center under a third-party extended warranty. Instead, you’ll be able to choose from any repair shop certified by the National Institute for Automotive Service Excellence (ASE®) for your covered repairs.
- Variety of coverage options: Many third-party vehicle service contracts allow you to customize your coverage. Some provide multiple plans within each level of coverage, making it easy to find the protection plan that’s right for your car and budget.
- Coverage for most vehicles: Depending on your provider, it’s possible to obtain coverage for a vehicle with well over 100,000 miles. Dealerships don’t normally have extended warranty plans for cars with high mileage.
- Additional perks: Many extended warranty providers will cover the cost of roadside assistance and towing in case you break down on the side of the road, as well as provide rental car reimbursement.
Our Take: Should You Buy An Extended Car Warranty?
As long as you do your research and understand your contract, an extended vehicle warranty can be a smart buy if you’d like to avoid paying out of pocket for both small and major repairs. To find the service contract that’s right for you, though, you’ll need to research plans and pricing options.
One of the best ways to make sure an extended warranty is worth it is to get a quote directly from a warranty provider. Ask the provider what plan options are available for your vehicle and thoroughly read the fine print of your contract before signing up. The best providers will offer you a free quote and answer all questions and concerns without pressuring you to buy.
Get a free quote from our top picks below to see who offers the right coverage at the best price:
The Best Extended Warranty Providers
Don’t be wary of extended warranties because of scam warranty companies. These scammers contact you to let you know that your vehicle is no longer protected by a warranty. The salesperson pressures you to buy an extended warranty contract, usually at a high price. When it comes time to get a repair, the company may have dissolved or gone out of business.
You can protect yourself from these scams by researching auto warranty companies before making a purchase. Reputable and trustworthy third-party warranty providers won’t use high-pressure sales tactics to get you to buy service contracts.
To help you make an educated decision, we conducted industry-wide research to find the most reputable extended car warranty companies. Learn more about the companies that scored highest in our review–Endurance, Carchex, and CarShield.
#1 Endurance: Best Overall
Endurance is our highest-rated provider, having earned 4.6 out of 5.0 stars in our review and our award for Best Overall. This provider stands out because they provide direct coverage, instead of partnering with another provider, as many companies do. That means that claims are processed more quickly and smoothly.
Endurance offers six levels of extended car warranty coverage, ranging from a powertrain warranty to bumper-to-bumper warranty coverage. Depending on the coverage option you choose, you’re able to get up to 8 years or 200,000+ miles of warranty coverage, making it a great choice for high-mileage and used cars.
#2 Carchex: Best Industry Reputation
Carchex is one of the most trustworthy extended warranty providers, with an A+ Better Business Bureau (BBB) rating and endorsements from brands like Kelley Blue Book, Carfax, and Edmunds.com. This is why we named it Best Industry Reputation in our comprehensive review. It’s also a great option for used car owners, because it can cover cars up to 20 years old with 250,000 miles.
You’ll find five levels of warranty coverage to choose from with Carchex, along with extra perks like roadside assistance, rental car reimbursement, and trip interruption benefits.
#3 CarShield: Best Flexible Payment Plans
We appreciate CarShield’s flexible coverage options–it offers month-to-month contracts for those looking to avoid a long-term commitment. Perks with each plan include 24/7 roadside assistance, rental car reimbursement, towing, and more.
In addition to providing standard coverage, CarShield offers plans that cover high-tech cars, luxury vehicles, and even motorcycles and ATVs. It also offers a plan that’s exclusively for electric vehicles.
Should You Get An Extended Warranty: FAQ
Below are some common questions surrounding whether or not you should get an extended warranty.
What is an extended warranty?
An extended warranty is a plan you can purchase to protect your vehicle in the event of a mechanical breakdown. It can be viewed as an optional continuation of your car’s new vehicle factory warranty, and may provide you peace of mind when faced with expensive repairs.
Is it a good idea to buy an extended warranty?
If you’re worried about paying a large repair bill out of pocket, an extended warranty may be right for you. However, if you only plan to keep your new car within its factory warranty time limits, an extended warranty likely isn’t worth your money.
What are the disadvantages of an extended warranty?
Simply put, you may never use your extended warranty. You can’t predict when you’ll suffer from a mechanical breakdown, if at all. Many who choose to purchase an extended vehicle service contract do it for the peace of mind.
How We Rate Car Warranty Companies
Our review team extensively researches extended car warranty providers to deliver informed and unbiased assessments of leading companies. We evaluate several key rating factors that are important to consumers to determine which providers are the best in the industry:
- Reliability: Warranty providers that earn strong ratings from the Better Business Bureau (BBB), work with reliable partners and administrators, and have a long history in the warranty industry score well in this category.
- Coverage Plans: We take a close look at the coverage plans available through each provider, including how many are offered, maximum term limits, plan exclusions, and more. We also evaluate the added benefits companies include with their warranty plans, such as roadside assistance and trip interruption benefits.
- Pricing: Our team performs a secret shopper analysis for a variety of vehicles and coverage plans to get a sense of a provider’s average costs. We see how each company’s pricing, deductible options, and discount opportunities compare to competitors when determining this score.
- Transparency: We evaluate the availability and transparency of each company’s contracts, as well as whether each provider offers a money-back guarantee.
- Customer Experience: We consider customer reviews and complaints from sites like the BBB and Trustpilot. Our team also reaches out to customer service reps during our secret shopper analysis to get a sense of the customer experience with each company.
