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Is An Extended Car Warranty Worth It?

An extended car warranty covers the repairs of important components and offers perks like roadside assistance, rental car reimbursement, and more.

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02/04/2024 09:17 PM

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An extended auto warranty can give you peace of mind by protecting you against expensive out-of-pocket repairs to your vehicle. However, this peace of mind comes at a price, and can cost thousands of dollars. You may be wondering–is an extended car warranty worth it?

Our guide helps you determine if an extended car warranty is right for you. We’ll discuss the pros and cons, what it covers, exclusions, and some of the top extended auto warranty providers available.

Reputation: 4.5/5.0
Coverage: 5.0/5.0
Price: 4.5/5.0
Customer Experience: 4.5/5.0
idée Endurance is our first choice for extended warranties
  • Best Plan Offerings
  • Mileage Covered: 200,000 miles on the odometer
  • Free Cancellation: Full refund within 30 days
  • Plan Options: 6 different plans to choose from
  • Longest Plan Term: Up to 8 years
  • Discounts: $300 same-day signup discount, $250 shopping voucher, and others
Plan coverage includes Endurance Elite perks™
Exclusionary plan One-year membership for free
Powertrain plan Tire repair and replacement
Maintenance coverage with Endurance Advantage Key fob replacement
Roadside assistance Total loss protection
Towing Collision discount
Rental car $250 rewards voucher
Trip interruption coverage Endurance Protect app

The Gist:

  • A vehicle service contract minimizes your out-of-pocket costs when you take your vehicle to a dealership for a covered repair. 
  • Depending on your vehicle and needs, you may not use the coverage you paid for with an extended car warranty.
  • When shopping for providers, make sure to compare at least a few, so you can find the right coverage options at the best prices for your needs.

Should You Get An Extended Warranty For Your Car?

An extended auto warranty can shield you from high repair costs. Many warranty providers offer different levels of protection. Depending on your needs, some levels of protection may offer valuable peace of mind.

Here are some questions to help you know whether buying an extended car warranty is worth it or not:

  • Is your car still under the factory warranty? And if so, when does it expire?
  • Do you have a higher-mileage vehicle that needs regular repairs?
  • How much are the average annual repair costs for your vehicle?
  • Does your vehicle come from an unreliable car brand that’s more prone to mechanical breakdowns after a few years?
  • Would you like to have perks like roadside assistance, rental car reimbursement, or trip interruption coverage?

When Is An Extended Car Warranty Worth It?

An extended car warranty is worth it when your car needs frequent or expensive repairs. The more you drive your vehicle, the more often things are likely to break. Once your car’s factory warranty expires, you have to pay for repairs. If an engine or transmission part requires repair, you could be looking at hundreds to thousands of dollars in expenses out of pocket.

Many extended warranty providers allow you to roll your costs into affordable monthly payments. Additionally, you only have to pay a deductible for covered repairs. Once you pay this to the repair facility, your provider or manufacturer covers the rest. This means if your vehicle requires extensive repairs, or even one repair to one of its most critical components, one claim can cover the total warranty costs.

What An Extended Warranty Covers

Regardless of whether you have a used car or a new one, coverage depends on the plan and provider you choose. Most plans cover your vehicle’s major components, like its engine, transmission, and more. You can also choose plans with more extensive coverages for steering, air conditioning, and front suspension.

Additionally, some warranty providers offer mechanical breakdown insurance (MBI). This works like an extended auto warranty in that it covers a list of components that might break down due to mechanical failure. 

For example, if you’re a California driver, Endurance offers three MBI plans, including Wrap, which covers all the components your manufacturer’s warranty doesn’t cover. Also, insurance carriers like Progressive offer MBI coverage. You can add these plans to your existing car insurance policy and roll the costs into your premium payments.

What An Extended Warranty Doesn’t Cover

Many plans have similar exclusions as well. Exclusions are items your provider won’t pay for under your extended auto warranty. Some of the most common are:

  • Routine maintenance: This typically means oil changes, air filters, and tire rotations.
  • Wear-and-tear components: These are wiper blades, brake pads, light bulbs, and other things that wear out with normal use.
  • Aftermarket parts: If your vehicle is under a manufacturer’s extended warranty, it might not cover repairs made with parts not made by the manufacturer.
  • Modifications: Under manufacturer warranties, you must receive their approval before doing modifications or the modified parts might not be covered.
  • Damages from misuse: If you tamper with the vehicle, or engage in reckless driving acts like off-roading or street racing, your extended warranty won’t be involved.
  • Repairs related to weather events: If your vehicle incurs damage from wind, hail, fire, tornados, floods, or falling objects, your comprehensive car insurance coverage may pay for the damage instead of your warranty. 
  • Damages from collisions: If you damage your automobile’s tire due to potholes, your collision insurance can reimburse the cost of new tires. Essentially, if the damage is something usually covered by car insurance, your extended warranty won’t cover it.

While these are exclusions many plans have in common, they don’t apply to all plans. It’s important to read the fine print to see what extended car warranty works best for you.

Types Of Extended Warranties

Your manufacturer or provider will offer different coverage options. Below is a closer look at the most common warranty plans: 

Bumper-To-Bumper Plans

Bumper-to-bumper warranties are the most comprehensive coverage plans available, typically covering thousands of components. As exclusionary warranties, these plans only list down the parts they don’t cover in the contract. Keep in mind that bumper-to-bumper plans are the most expensive to buy.

Powertrain Plans

As its name implies, a powertrain warranty covers the parts affiliated with moving your vehicle, such as the car’s engine, transmission, and drivetrain. These warranties work best for cars with many miles or years on them, as these cars’ covered components are often the most expensive to repair if something goes wrong. Luckily, powertrain warranties are some of the cheapest coverage types you can buy.

Other Warranty Types

You’ll often find mid-tier level warranties that cover more than the most essential components (like powertrain warranties), but don’t cover quite as much as bumper-to-bumper warranties. Mid-tier plans often include everything you’d find in a powertrain warranty plus the electrical systems, steering, suspension, brakes, and more.

Mid-tier and powertrain warranties are called “inclusionary plans” meaning they list every component in your coverage. These are also known as “stated-component” or “named-component” plans. Some carriers also offer warranties for specific things like electronics or corrosion, which pays for rust damage. 

Typical Perks With Extended Warranties

Along with these coverage types, many warranty companies offer perks like:

  • Roadside assistance: This perk covers towing services, flat tires, fluid deliveries, battery jump-starts, and locksmith services. It’s also usually a 24-hour service.
  • Trip interruption coverage: If you break down away from home (usually 100 miles or more) and your provider covers the repair, trip interruption pays for food and lodging while you wait for mechanics to work on your vehicle.
  • Rental vehicle reimbursement: While your vehicle is in the shop, some providers pay for you to have a rental car. There will be a daily and maximum benefit amount listed in your contract. It may not cover fuel, tolls, or security deposits. 
  • Deductible amount: Many warranty plans give you a choice between several deductible increments– $0, $100, and $200, usually. The deductible is the amount you must pay before your provider pays the rest of the claim.
  • Flexible payment options: In our research, most providers allow you to make one-time or affordable monthly payments, depending on your budgetary needs. 

Typical Car Ownership Costs

Owning a vehicle involves multiple costs, like insurance, state registration fees, and maintenance expenses. Even if you bought a new car instead of a used car, you’ll still need to do regular maintenance to keep it operating in peak condition. 

Scheduled Maintenance 

When you buy a new or used car, it comes with an owner’s manual. The owner’s manual contains key information including a maintenance schedule. Often, this details how often to bring your vehicle in for certain services by mileage–for example, your car may need an oil change every 5,000 miles. 

When you buy a new car, many dealerships incentivize you to do routine maintenance. Toyota offers ToyotaCare, a no-cost maintenance plan included on new cars for two years or 25,000 miles–whichever happens first. With this plan, anytime you need an oil change or tire rotation, your local dealership does the repair at no cost to you. Many vehicle manufacturers also offer maintenance plans, which cover future oil changes and more.

Breakdowns And Repairs

While it’s rare for new cars to experience breakdowns, they still happen. As your car accumulates more miles, you may need repairs more frequently. Routine maintenance is important because it keeps your car in peak condition, and it also allows your mechanic to identify and fix small issues before they become costly. 

Typical Repair Costs

There are ways to estimate repair costs when choosing a new or used car. Websites like RepairPal do reliability ratings for 32 vehicle brands. Choose the make and model of your vehicle, then use the website to see average annual repair bills, the frequency of repairs, and the percentage of repairs that are severe. 

Ultimately, this can help you determine whether you’d be comfortable preparing an out-of-pocket budget for possible repairs in the future, or paying for an extended warranty.

Extended Car Warranty Costs

Our survey determined the average total cost of an extended auto warranty is between $1,615 and $3,208. There are many factors at play determining your costs:

Vehicle AgeAs your car becomes older, it might be more susceptible to needing expensive repairs, which can impact the rate you pay for an extended warranty. You may pay more for coverage if your car needs frequent expensive repairs.
Vehicle MileageThe same principle applies to your vehicle’s mileage. You’ll pay a lower rate for extended warranty protection for a new car than you will for high-mileage vehicles. Luckily, warranty providers like CarShield and Carchex specialize in coverages for higher-mileage vehicles.
Vehicle Make and ModelThere are certain brands that are more likely to have expensive repairs, like BMW. If your vehicle manufacturer has a history of expensive or frequent repairs, you might pay more for warranty protection.
DeductibleMost manufacturers and third-party providers offer varying deductible amounts. Keep in mind that the lower your deductible is, the more you’ll pay for warranty coverage.
ProviderSome providers charge more for warranty plans. That’s why it’s important to receive several quotes to see which carrier offers you the right balance of coverage and value.
Coverage LevelThe more parts your plan covers, the more expensive it may be. When you reach out for a quote, make sure to read the fine print on the different plans offered–what each warranty covers, their exclusions, and costs.

Third Party Vs. Manufacturer Extended Warranties

Both third-party warranties and manufacturers cover major car repairs, but there are distinct differences between them:

  • Repair facilities: With manufacturer warranties, you must take your car to a dealership affiliated with that brand. With third-party warranties, you have more flexibility in the mechanic you choose. 
  • Service: Manufacturer warranties allow you to deal directly with your manufacturer, while third-parties might have another company servicing the policy.
  • Parts: Factory extended warranties require parts made from the manufacturer. Third-party companies allow aftermarket parts when doing car repairs.
  • Purchase periods: You can typically buy an extended warranty from a third-party company whenever you need to, but you might be required to buy one from a manufacturer before the original factory warranty expires.

In either instance, it’s important to do your research. You can see customers’ experiences with a manufacturer’s warranty or a third-party provider through the Better Business Bureau (BBB). You can also read our review on the best extended auto warranty providers, where we did extensive research to find the best options for you.

Is An Extended Car Warranty Worth It?: Our Take

When you consider the high cost of repairs for certain new and used cars, and whether or not you plan on owning your car past its manufacturer warranty, an extended auto warranty may offer valuable peace of mind. It offers many components of manufacturer’s warranties, like powertrain and bumper-to-bumper protection. You’ll also have other perks like roadside assistance, rental car reimbursement, and flexible payment options.

However, if you don’t plan on keeping your car past its manufacturer warranty, or if it has a high reliability rating and doesn’t need frequent or expensive repairs, an extended car warranty might not be worth its cost.

Third-Party Extended Warranty Options

If you’re considering an extended car warranty, our team recommends comparing contracts and quotes from different providers. Based on our research, Endurance and Olive® are some of our favorites.

Endurance: Best Plan Offerings

Endurance is one of our top choices for extended car warranties. The company offers plans with high mileage limits and long terms, as well as perks like roadside assistance and rental car reimbursement. Endurance also offers sample contracts on its website, giving you a better picture of what you’re buying before you even request a quote.

Keep reading: Endurance warranty review

Olive: Great For Young Drivers

Olive offers extended car warranty solutions and mechanical breakdown insurance. The company’s website features an online quote tool and chat option to help you stay informed during every step of the process. Olive coverage is available in all 50 states with no waiting period for approved services and repairs. 

Keep reading: Olive warranty review

Is An Extended Car Warranty Worth It?: FAQ

Below are frequently asked questions about whether or not extended car warranties are worth it:

Is it worth it to get extended warranty on a car?

It may be worth it to buy an extended auto warranty if your car has a lot of miles on it. Cars with more years and miles are more likely to break down or suffer mechanical issues. You have to decide if you’re comfortable paying for repairs out of pocket, which means researching the common repairs and repair costs for your vehicle’s make and model. One major repair can often cost as much as an entire extended warranty does, after all. 

Is it worth getting an extended warranty from the dealer?

It’s not worth getting an extended warranty from the dealer because a car dealership typically marks up prices.

How much would an extended warranty cost?

We found the average extended warranty costs vary between $1,615 to $3,208. 

How We Rate Warranty Providers

Our review process aims to deliver consistent and unbiased assessments of extended auto warranty providers. While there are multiple qualities that make a warranty company successful, our review team focuses on those we believe are the most important for consumers:

  • Reputation: It’s important that an extended car warranty company is able to meet its claims obligations. Companies with a strong rating from the Better Business Bureau (BBB) score well in this category. Established providers with a long history of reliable service also receive positive marks.
  • Coverage: Our team of experts looks at the number of extended warranty plans available, as well as term limits, exclusions, and added benefits like roadside assistance. Ratings also take into account the availability of maintenance coverage.
  • Cost: Cost can be difficult to compare between providers because so many factors impact vehicle service contract pricing. To determine our cost score, we perform a secret shopper analysis for a variety of vehicles and plans and consider available deductibles.
  • Transparency: Our team evaluates the availability and transparency of each company’s contracts, as well as whether each provider offers a money-back guarantee.
  • Customer Experience: We listen to real customer sales calls and comb through reviews on sites like the BBB to learn about customer experiences. Warranty companies with a low volume of complaints score well in this area. We also consider the availability of mobile apps and chat features.

*Data accurate at time of publication.