Extended Car Warranty: Is Extra Protection Worth the Price?

It’s reasonable to expect that your new car will hold up for a certain amount of time or for a certain number of miles. But if you’ve ever purchased a car, you know things don’t always go according to plan.

If your car wears down or malfunctions ahead of schedule, the manufacturer’s warranty can help pay for the repairs, parts and labor. But what happens after the manufacturer’s warranty expires? If you’re considering purchasing an extended car warranty for additional protection, here’s what you should know.

What does an extended car warranty cover?

Manufacturer’s warranties are built into the price of each new car. However, if you’re concerned about the reliability of the car, the cost of car repairs, or you just want extra coverage, you might consider buying an extended warranty for extra coverage.

Each type of extended warranty applies to different parts of the car, but they generally cover the cost of parts and labor for specific repairs during a set timeframe or number of miles, minus a deductible (if applicable). Here’s what you can expect:

• Powertrain warranty: This common warranty plan covers the engine, transmission and drivetrain, typically for five years or 60,000 miles.
• Bumper-to-bumper warranty: Another common plan, bumper-to-bumper coverage is the most comprehensive warranty you can purchase. It typically covers any defects in the vehicle for three years or 36,000 miles.
• Drivetrain warranty: When the manufacturer’s warranty runs out, this basic warranty can cover specific components like your transmission, drive shaft, axles, differentials and wheels for up to five years or 60,000 miles.
• Corrosion warranty: This warranty may cover severe rust damage and other corrosion caused by environmental elements like rain or salt.

Manufacturer’s extended warranties vs third-party extended warranties

If you want an extended warranty for a car, you don’t have to buy it from the manufacturer. But going that route does have advantages. Here’s how manufacturer’s extended warranties can differ from third-party products:

• More convenient to purchase
• Generally more expensive
• Can be used for deductible-free repairs at dealerships
• Repairs are done by factory-trained technicians
• Covers new or nearly new parts from the manufacturer
• Unlike some third-party warranties, you don’t have to pay up front and then get reimbursed

How much does an extended car warranty cost?

The cost of extended warranties can range anywhere from hundreds to thousands of dollars a year, but you’ll likely pay in the thousands.

Like the price of the car, you can negotiate the price of an extended warranty. But even if you can get the price down, you may want to pass on the extended warranty altogether, since they usually cost more than the out-of-pocket cost of repairs. Additionally, you may have to pay a deductible for each repair, potentially as high as $500 for each repair.

Are extended car warranties worth it? Ask yourself these three questions

1. How long does the warranty last?

Each warranty has its own set timeframe or mileage limit before it expires. For example, powertrain warranties typically last five years or 60,000 miles, whichever comes first.

2. What’s the difference between the manufacturer’s warranty and extended coverage?

Warranties provided by the manufacturer cover certain problems with a new vehicle for a set amount of time or miles. If the factory warranty doesn’t cover your needs, you can buy an extended warranty for longer or more comprehensive coverage of mechanical or electrical malfunctions.

3. Are extras, like roadside assistance or rental car coverage, included in the price?

Some extended warranties come with roadside service included, and they may also cover towing or provide rental car reimbursement if you need them in connection with a car repair. Your warranty may cover special parts for your car as well, like the battery of an electric vehicle.

Where to find extended car warranties

If you’re looking for an extended warranty, you can call dealerships to compare quotes. You might even ask the dealer to roll the cost into your financing. Alternatively, you can go through an auto club or car insurance company. Just don’t buy your extended warranty from an unsolicited robocaller, since warranty offers by phone are often scams.

  Manufacturers

Some manufacturers automatically include extended contracts with their certified pre-owned vehicles, but manufacturers also offer a variety of extended products. For example, Toyota and MINI both include towing in their standard contracts, and MINI offers unlimited mileage coverage for some extensions. The only way to be sure of what the manufacturer includes is to read the fine print.

  Auto warranty companies

Each extended warranty company has something different to offer, so it’s worth shopping around for a good price. Here are a few well-established warranty companies and how they compare:

Endurance: You can get a quote online from Endurance, with prices based on the age and mileage of your vehicle and your driving habits. Expect coverage to generally cost around $4,000. Endurance covers cars up to 20 years old, and every plan includes roadside assistance and key fob replacement.

Carchex: This online warranty marketplace has been in business for over two decades. Their plans cover your car for up to seven years, and their Care plan also includes roadside assistance, towing and rental cars.

Concord Auto Project (CAP): CAP has three different levels of extended warranty plans that all include roadside assistance, towing and rentals. Customers can set up interest-free payment plans, and if you’re not satisfied with the service within 30 days, you can get your money back.

Used-car sellers

Even if you don’t buy a car from the manufacturer, you may be able to purchase an extended warranty from the dealer you visit. You can also check to see if a used vehicle is still covered by the manufacturer’s warranty. Here are a few used-car sellers to consider:

Carvana: All Carvana cars come with a 100-day or 4,189-mile limited warranty, but you can choose to buy one of three extended plans. Each one comes with roadside assistance and zero deductible if you get repair work done at a Carvana-preferred repair facility.

Carmax: Every Carmax purchase comes with 90 days or 4,000 miles of warranty coverage. For extra coverage, you can buy Carmax MaxCare when you make your purchase, which includes roadside assistance and discounts on deductibles.

NOTE: You can only purchase MaxCare when you purchase your car. The extended warranty is not available after your vehicle purchase is complete.