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Pros And Cons Of Extended Car Warranties

Consider coverage for critical systems like the engine or expensive components like navigation when weighing the pros and cons of extended car warranties.

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02/07/2024 10:23 PM

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The Gist:

  • Extended car warranties protect your budget from expensive emergency vehicle repairs, which happen with more frequency among older vehicles.
  • Extended car warranties can cost on average $795 per year and typically require an additional deductible payment.
  • Our team recommends considering extended warranty quotes from Endurance and Carchex.
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

If you’re coming to the end of your new vehicle coverage or looking for ways to cut down on repair costs, you may be weighing the pros and cons of extended car warranties. Whether this type of coverage is right for you depends on several factors, including your vehicle and its typical repair needs and associated costs.

In this article, we go over the benefits and drawbacks of extended warranties. We’ll also talk about what you can expect to pay for a plan, how extended coverage works, and the best extended warranty companies to request free quotes from.

Benefits Of Extended Warranty For Cars

An extended warranty offers several benefits for most drivers, including savings on vehicle repairs and increased vehicle resale value.

Save A Significant Amount Of Money On Costly Repairs

While the reliability of automobiles has improved over time, they are still costly to maintain. According to AAA, even new vehicle owners spend about $1,470 yearly to maintain and repair their vehicles.

For example, according to RepairPal, a typical timing belt replacement can cost between $603 and $785. In addition, a broken timing belt replacement may cost up to $2,000 or more if it causes damage to a vehicle’s pistons, water pump, or valves.

If you own an extended car warranty from a reputable provider such as Carchex, you’ll typically pay a deductible when your timing belt needs replacement. This is the most important consideration when comparing the pros and cons of extended car warranties. Deductibles range from $0 to $200, which is significantly lower than the cost of parts and repairs for this type of repair. 

Keep Your Vehicle Instead of Feeling Pressure To Sell It

If your car needs a costly repair to be safely driven, you may feel it’s necessary to sell it, even if you would love to keep it.

According to a 2023 Consumer Affairs study, 59 percent of U.S. consumers cannot afford a $1,000 unexpected car repair bill. Suppose you would like to keep your vehicle and cannot afford a costly repair but can afford a monthly car warranty payment. In that case, buying an extended warranty is an intelligent decision.

Plan Perks

Many extended car warranties come with additional perks or plan benefits. These perks typically include:

  • Towing
  • Fuel delivery
  • Rental car reimbursement
  • Lockout assistance
  • Trip interruption reimbursement
  • Flat tire assistance
  • Battery jumpstart service

Some warranty companies offer additional benefits for tire repair and replacement. Check warranty contracts for benefits and review the terms of these benefits before committing.

Customize Your Protection

Most extended car warranty companies offer various plan options, including stated component powertrain coverage and exclusionary coverage. Powertrain warranty coverage helps with repairs to the most critical vehicle systems, including the engine, transmission, and drive axles. 

Exclusionary coverage functions like a bumper-to-bumper warranty and covers most parts and repairs. Many intermediate stated component coverage plans that are available serve as a middle ground between exclusionary and powertrain coverage.

Beyond these types of coverages, car warranty providers often allow you to design a partial or fully customized plan depending on your needs. For example, modern vehicles come with complex technological systems, and it is common for warranty companies to offer at least one level of coverage that covers these systems.

For automobile owners who can’t live without their Bluetooth or navigation system functioning correctly, purchasing an extended warranty for their technological systems makes sense. Drivers who don’t rely on these systems can save money by choosing not to cover them.

Flexible Payment Terms

Many extended car warranty companies offer the option of monthly payments, meaning you won’t need to pay for the warranty plan upfront. Additionally, some contracts are month-to-month, so you don’t have to commit to several years of coverage if you don’t need it.

Cons Of Extended Warranties For Cars

Though extended car warranties can save you significant amounts on expensive repairs, they can sometimes cost you more in the long term.

If you’re paying $66.25 monthly for an extended car warranty, that is $795 a year out of your pocket. In addition, there is often a deductible whenever you claim warranty coverage. An extended car warranty may not be worth it for someone with a very reliable vehicle who can afford a costly repair.

You May Feel Tied Down To Your Current Vehicle

Extended warranties are often cheaper the earlier in your vehicle’s lifespan that you purchase them. If you invest in an extended auto warranty for years, you may hesitate to buy a different vehicle. However, many car warranties are transferable, which may help increase resale value.

For automobile owners without an extended car warranty, purchasing a different vehicle may be easier.

Extended Warranty Plans Only Cover Some Things

Some consumers buy an extended warranty plan without reading the plan’s details and are caught off-guard when their extended car warranty does not cover a needed repair. Similarly, many drivers assume a warranty will cover routine maintenance items like oil changes, filter replacements, or new brake pads. Unfortunately, most extended warranty plans don’t offer coverage for these items.

Extended car warranties also won’t cover things typically covered by auto insurance. Don’t expect to find warranty coverage for damage caused by accidents, misuse of the vehicle, or severe weather.

Reputable extended warranty providers will provide a transparent list of exclusions on their plans. Ideally, you’ll be able to find sample contracts that include coverage terms, cancellation policies, and other critical information. It is wise to read that list before purchasing an extended car warranty.

Are Extended Car Warranties Worth It?

Yes, an extended car warranty can be worth it for you. There are more pros than cons to buying an extended warranty if you can’t afford unexpected costs for major repairs. In this way, these plans give you peace of mind if you plan to keep your car for several years.

An extended car warranty, also called a vehicle service contract, is a protection plan that takes effect after your original factory warranty expires. The warranty is designed to bring peace of mind on the road. 

While more likely for older, used cars, unexpected breakdowns can occur anytime. Suppose you own a new car from a dealership. In that case, it may still be covered under the manufacturer’s warranty, but check the fine print since the factory warranty will only cover auto repairs for a few years after purchase. 

Every car owner should have a plan for how they will pay for repairs. One way to plan for these costs is by purchasing an extended car warranty.

Pros And Cons Of Extended Warranties: Our Take

After considering the pros and cons of extended car warranties, you may decide that an extended warranty is right for you. The first two steps in finding the best warranty for your needs is researching and comparing prices. We recommend you shop for the best price and coverage for your car from top third-party warranty providers.

Our Recommendations For Extended Car Warranties

Get free quotes from our top three picks for aftermarket car warranty companies below:

Endurance: Best Plan Offerings

Endurance offers direct-to-consumer extended warranties, which means that warranty services and claims are handled directly by Endurance.

With Endurance, you don’t have to worry about a middleman or underwritten provider. Endurance is known for its excellent customer service during the quotes and claims processes.

Additionally, Endurance warranty plans allow car owners to choose from any repair shop certified by the National Institute for Automotive Service Excellence (ASE®) to complete covered repairs.

Learn more about coverage options in our complete Endurance warranty review, as we rated the company 4.5 out of 5.0 stars. You can also reach out for a free, personalized quote from Endurance below.

Carchex: High Mileage Limits

If, after reviewing our pros and cons, you’ve decided to purchase an extended car warranty, we recommend reaching out to Carchex for a custom quote.

Carchex maintains an A+ rating and accreditation from the Better Business Bureau and has received endorsements from industry leaders like Carfax, Kelley Blue Book, and Our Carchex review rated the company 4.4 out of 5.0 stars.

Carchex offers five extended warranty plans, each of which can be customized. All plans include 24/7 emergency roadside assistance, gas delivery, trip interruption, and lockout services.

Do you need help deciding between Endurance and Carchex? Read our Endurance vs. Carchex review, and reach out for a Carchex quote to see how much you would pay for coverage.

Extended Car Warranties: FAQ

Below are some frequently asked questions about the pros and cons of extended car warranties:

Are car extended warranties worth it?

Car extended warranties are worth it for some customers, but not for others. It depends on your individual situation. In general, those with unreliable vehicles and who lack the funds to pay for expensive repairs out of pocket should consider an extended warranty. To learn more, we recommend reading our article on whether extended car warranties are worth it.

What is a good price for an extended car warranty?

A good price for an extended car warranty depends on your particular vehicle and coverage needs. There are many different factors that determine the pricing of an extended vehicle warranty, including the age, model, and mileage of your vehicle. We think that Carchex and Endurance both provide strong service at a reasonable cost to consumers.

Who has the best extended car warranty?

We recommend Endurance for the company’s extensive lineup of coverage options. However, if you’re looking for top-notch customer care, our review team found that Carchex is also a great choice.

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) and a long history of reliable service score well in this category. We also evaluate the availability and transparency of each company’s contracts, as well as whether each provider offers a money-back guarantee.
  • 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.
  • Price: 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.
  • 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.