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Crash Course:
- Extended car warranties are typically worth buying when your car is unreliable, comes with expensive repair and maintenance costs, and has high mileage.
- The price of an extended warranty can sometimes outweigh paying for repair bills outright.
- Choose carefully between manufacturer extended car warranties and third-party providers.
Extended car warranties can be a saving grace when you experience a mechanical breakdown, but they can also add a few thousand dollars to your cost of vehicle ownership. At the end of the day, are extended car warranties worth it?
In this article, we’ll go over the pros and cons of extended auto warranties, break down typical costs, and give you recommendations on where to buy the best extended car warranty coverage.
Is an Extended Car Warranty Worth It?
Many drivers believe extended car warranties are worth it if only for the peace of mind they bring. With an extended auto warranty, you don’t have to worry about whether you can afford mechanical repairs after your factory warranty expires. In fact, according to a 1,000-person survey we conducted, almost 70% of warranty holders said their coverage paid for all their needed repairs.
However, an extended warranty may not be worth it for every driver. Below, we’ve compiled a list of pros and cons for you to consider before deciding whether to purchase coverage.
Extended Car Warranty Pros
Vehicle service contracts come at an additional cost to car owners. However, they offer several key advantages.
Pro: Extended Car Warranties Can Help Finance Repairs
Repair costs can add up quickly, especially for major repairs like replacing a head gasket or fuel pump. New cars come with a manufacturer’s warranty that protects against these costs for the first few years of your vehicle’s life. However, after it expires, you’re on your own to cover the full cost of auto repairs.
Extended warranty plans pay for parts and labor for covered repairs, leaving you responsible only for your coverage premiums and your deductible. You can also end up saving money in the long run if you use your extended warranty coverage multiple times or have an exceptionally large repair.
Pro: You Can Choose the Coverage That’s Best for You
Manufacturers sometimes have multiple extended warranty plans to choose from, but third-party providers almost always give you plenty of options. Our top two recommended providers, Endurance and CARCHEX, offer drivers five different coverage tiers. These range from basic powertrain plans to full bumper-to-bumper warranties, so you can ensure you’re only paying for the coverage you need.
Pro: You’ll Get Additional Perks
With almost every extended car warranty plan, you’ll get additional benefits alongside the coverage you choose. Standard perks include 24/7 roadside assistance, trip interruption coverage, and rental car reimbursement. Some providers, such as Endurance, go the extra mile to provide benefits like complimentary tire replacements, key fob replacements, entertainment vouchers, and more.
Extended Car Warranty Cons
With extended warranties, there are a few potential disadvantages to be aware of.
Con: An Extended Warranty Might Not Be the Most Cost-Effective Option
Extended car warranties are a great choice if you think you’ll use them. Otherwise, you may end up paying for coverage you don’t need. You’ll want to consider your vehicle’s reliability as well as your ability to pay for unexpected repairs outright to determine if an extended warranty is the best option for you.
Con: Sometimes, Coverage Options Are Limited
In some cases, especially with certain automakers, you’re limited to one or two coverage choices. You also may not have any flexibility with deductible amounts. If you’re stuck in a position with too few options, maybe skip the extended coverage or opt for a third-party plan.
Con: You’ll Have to Wait for Coverage
Most extended warranty plans have a 30-day and 1,000-mile waiting period before coverage kicks in. This allows the provider to ensure there are no pre-existing issues with your car. Sometimes, the perks that come with your plan are still accessible during this period, but that may vary by provider.
Extended Car Warranty Costs vs. Out-Of-Pocket Repair Costs
As we mentioned, extended car warranties can save you money if you need costly repairs. Let’s break down how much an extended warranty might cost you and what factors play into pricing.
What Is a Good Price For an Extended Warranty?
Based on our research, a good price for an extended warranty is anywhere from about $1,700 to $3,000. The reason for such a wide range is that costs are highly variable and dependent on your vehicle, the company you buy your plan from, and the choices you make about your coverage.
Car Warranty Cost Factors
There’s no one-size-fits-all pricing for extended warranty coverage. Companies base the cost of your coverage on a few key factors, including:
- Warranty length: Longer term limits will lead to higher overall costs.
- Provider: Companies charge different rates from each other, even for similar coverage. This is why it’s always a good idea to shop around for multiple quotes and compare them.
- Deductible: In general, the higher your deductible, the lower your premium cost will be, and vice versa.
- Warranty plan: The cost of your plan depends on what your car warranty covers. Bumper-to-bumper plans tend to cost more than lower-level coverage.
- Vehicle age: Older vehicles are more prone to mechanical breakdowns, so they’re often more expensive to cover.
- Mileage: Higher-mileage cars are more likely to need repairs. As a result, it typically costs more to cover them.
- Vehicle type: Expensive cars need expensive repairs, and that’s reflected in warranty costs. If you own a sports car or luxury car, you’ll likely pay more for coverage.
What Are Average Repair Costs?
Now that you know how much a warranty might cost, let’s take a look at how much you may pay out of pocket for repairs without a vehicle service contract. We looked at the five most popular car brands in the U.S. and compiled a table of their average annual repair costs, according to RepairPal.
| Car Brand | Average Annual Repair Cost | Reliability Rating |
|---|---|---|
| Ford | $775 | 3.5 out of 5.0 |
| Toyota | $441 | 4.0 out of 5.0 |
| Honda | $428 | 4.0 out of 5.0 |
| Chevrolet | $649 | 3.5 out of 5.0 |
Here’s the same data for popular luxury vehicles, according to RepairPal.
| Car Brand | Average Annual Repair Cost | Reliability Rating |
|---|---|---|
| Lexus | $551 | 4.0 out of 5.0 |
| BMW | $968 | 2.5 out of 5.0 |
| Mercedes-Benz | $908 | 3.0 out of 5.0 |
| Audi | $987 | 3.0 out of 5.0 |
These numbers are brand-wide averages, so they may fluctuate based on vehicle model. Additionally, repair costs will likely be higher for older or higher-mileage vehicles. However, even with these averages, it’s easier to tell whether an extended car warranty is worth it.
For example, according to our research, a five-year full-coverage warranty for a new Toyota Camry may cost you between $1,700 and $2,500. If you skip the extended coverage and pay for Toyota repairs out of pocket, you may end up paying about $2,200 over five years.
You can determine whether an extended car warranty would be worth it for your vehicle by looking at average repair costs on RepairPal and comparing the data with quotes from multiple extended warranty companies.
Where Should You Buy an Extended Warranty?
Figuring out your ideal extended warranty provider is another piece of the puzzle. In general, you have two options: your car manufacturer and a third-party provider.
Manufacturer Extended Warranties
Typically, you must purchase an extended warranty from the manufacturer at the time you purchase your car or before your factory warranty expires. Unfortunately, this doesn’t give you a lot of time to decide if you really need longer coverage. Term limits for manufacturer extended warranties usually max out at around 100,000 miles, which isn’t very long compared to third-party contracts.
Most of the time, manufacturers also make you return to the dealership to have covered repairs completed. On one hand, you’re sure to have access to factory-trained technicians and authentic parts. On the other hand, you’re limited on where you can go for service.
If your vehicle is still protected under its original factory warranty, call your local dealership to explore plan options and get a quote. If not, you’ll likely need to look for coverage from an aftermarket warranty provider.
Mechanical Breakdown Insurance
Some auto insurance companies sell mechanical breakdown insurance (MBI) as a policy add-on. These function like extended warranties, covering the cost of mechanical repairs when needed.
Most insurance companies only offer one level of MBI coverage. Some policies come with additional restrictions compared to plans offered by independent providers.
Third-Party Extended Warranties
Third-party warranty providers tend to offer more flexibility than manufacturers in terms of cost, repair shop availability, and coverage options. Reputable extended warranty companies can offer term lengths up to 15 years and 250,000 miles, depending on the provider. Drivers who plan on sticking with their car for the long haul would definitely benefit from such a long coverage plan.
With a third-party provider, you can also choose from multiple customizable plans so you can tailor your coverage to what you need. Additionally, you can usually take your vehicle to thousands of authorized repair shops across the U.S., including dealerships and mom-and-pop shops.
What Is an Extended Car Warranty?
An extended car warranty, or vehicle service contract, promises to pay for certain car repair costs after your factory warranty expires in exchange for an upfront or monthly payment. Unlike a car insurance policy which covers you in the event of a collision, extended car warranties protect against mechanical breakdowns or manufacturer defects in materials or workmanship.
Types of Extended Car Warranties
There are multiple types of vehicle service contracts available, the most common of which are a bumper-to-bumper warranty and a powertrain warranty.
Bumper-to-bumper coverage is similar to the factory warranty on a new vehicle, covering most car parts in the event of mechanical failure. These are also known as exclusionary warranties because they cover everything except for a few named components. Bumper-to-bumper warranties are typically the most expensive coverage plans a provider offers.
Powertrain warranties typically only cover the parts of your vehicle that make it move. These include your engine, transmission, drive axles, and related parts. They usually last longer than bumper-to-bumper warranties and tend to be cheaper but cover far fewer components.
Many warranty companies also offer levels of coverage in between these. Sometimes called enhanced powertrain warranties, these warranties cover other major systems, such as air conditioning and brakes.
Are Car Extended Warranties Worth It?: Conclusion
In many cases, an extended car warranty may be worth the cost. If your vehicle needs major repairs to the drivetrain or other critical components, those costs could easily exceed the cost of the protection plan and save you money.
But even if you end up spending more on your warranty plan than you would have on repairs, an extended warranty still has value. Having coverage offers real peace of mind, knowing you won’t have to pay out of pocket or run up a credit card bill to pay for repairs.
Ultimately, whether an extended car warranty is worth it for you and your vehicle depends on how you prefer to manage your expenses and what amount of risk you’re willing to take on. If you decide to buy coverage, make sure to get quotes from a few providers and read all of the fine print before making a decision.
Extended Car Warranty Providers That Are Worth a Look
Are extended car warranties worth it? Yes, if you go with the right provider and know you need the extra protection. When weighing your options, it’s a good idea to get quotes from more than one company. Below, we’ve highlighted a few of our top providers to get you started.
Endurance: Best Overall
We rated Endurance the Best Overall provider because it sells and administers all plans itself rather than brokering plans that are administered through other companies. This means there’s no middleman involved in the quotes or claims processes, which maximizes efficiency.
Endurance has six different coverage plans to choose from, which can last up to 15 years and 200,000+ miles. It also offers the best benefits package in the industry, which you can read about in our full Endurance warranty review.
CARCHEX: Best Reputation
If you want to purchase coverage for an old, high-mileage car, we recommend looking into CARCHEX. This provider has a specialty plan for high-mileage vehicles, and term limits last up to 10 years or 250,000 miles. CARCHEX offers five coverage plans that come with perks including emergency roadside assistance, rental car reimbursement, courtesy towing, and trip interruption coverage. Read a direct comparison between CARCHEX and Endurance in our Endurance vs. CARCHEX review.
Are Extended Car Warranties Worth It?: FAQ
Below are some frequently asked questions about whether extended car warranties are worth it:
What are the disadvantages of an extended warranty?
An extended warranty for your car has a few disadvantages despite having many benefits. The main disadvantage is that you may not use the coverage you pay for. Some low-quality providers can also be a hassle to deal with and may make it difficult to use your coverage.
Is buying an extended warranty from a dealership worth it?
Extended warranties offered at dealerships are often not worth it compared to buying coverage from reputable independent providers. Manufacturers’ extended warranties sold at dealerships come with many restrictions and few choices. If a used car dealership sells warranty coverage from third-party providers, they often do so at a markup, meaning you can get a better price if you buy one on your own.
Are extended car warranties worth it for used cars?
Extended car warranties can be worth it for used cars in a few different ways. If your used vehicle needs major repairs, you may get more coverage from your plan than what you pay for it. Used car warranties also offer peace of mind, guaranteeing that you can get your car fixed without having to worry about the cost of repairs.
Do extended car warranties cover oil changes?
Most extended car warranties don’t cover oil changes. Vehicle warranties typically don’t cover routine maintenance services or wear-and-tear items like brake pads and windshield wipers.
Our Methodology
Our expert review team takes satisfaction in providing accurate and unbiased information. We identified the following rating categories based on consumer survey data and conducted extensive research to formulate rankings of the best extended auto warranty providers.
- Industry Standing: Our team considers Better Business Bureau (BBB) ratings, availability, and years in business when giving this score.
- Coverage: Because each consumer has unique needs, it’s essential that a car warranty company offers an array of coverage options. We take into account the number of plans offered by each provider, term limits, exclusions, and additional benefits.
- Affordability: A variety of factors influence cost, so it can be difficult to compare quotes between providers. Our team performs ongoing secret shopper analyses for different vehicles, mileages, warranty plans, and locations to give this rating.
- Customer Service: Reputable extended car warranty companies operate with a certain degree of care for consumers. We take into account customer reviews, BBB complaints, and the responsiveness of the customer service team.
*Data accurate at time of publication.
