Everything You Need to Know about Extended Warranties

Once you’ve finally found the car you want, you’re ready to drive off into the sunset. But, you still have all the paperwork to do, and that’s when you have to make some key decisions – like whether or not to get an extended warranty

An extended warranty is a service contract that will cover the cost of certain services and repairs after the factory warranty expires.

Before you commit to purchasing one, you should definitely do some research to make sure it’s right for you. Making the wrong decision could end up costing you big time.

To start with, here are three things you might not know about extended warranties.

  1. You don’t actually have to purchase one when you buy the car. You have plenty of time to shop around and find one that appeals to you, but it’s best to get one in your first year of ownership when prices are lowest.
  2. An extended warranty starts the day you get it, not the day that the old one expires. This means you’ll be paying more for double coverage until your factory warranty ends.
  3. There are three suppliers of extended warranties: the car manufacturer, the dealership, and independent entities.

So how do you know if an extended warranty is a good idea? Answering this question is complicated because a number of factors are involved. Here are three you should consider before you decide.

  1. How long you plan to keep the car.

If you’re planning to drive the car until it dies, then you’ll probably benefit from the warranty. But if you buy and trade cars frequently – say after only three or four years – then you don’t need the extension because your repairs will be covered under the original warranty.

  1. What will give you peace of mind.

Do you hate surprises – especially pricey auto repairs? Then maybe you would feel more secure knowing that major repairs are covered under an extended service contract. But if you’d rather just pay for repairs when they are needed, then an extended warranty is not for you.

  1. The age of the car

Newer cars are more reliable than ever, and owners are expecting to pay less in repairs. So a warranty is unnecessary, right? Well, that depends on how you look at it. You won’t be doing as many repairs, but the few that your car may need could be quite costly. Newer cars are pricier to repair because of the complex computer circuitry and electronics that make them run so well.

Where to Get Your Warranty

If you decide to go for the extended warranty, your next step is deciding where to get it. Warranties offered by the car’s manufacturer will cover the broadest range of services and repairs, but one from your car dealership may be cheaper. You can also get great deals from independent entities, but beware of scammy offers from shady companies.

Extended warranties are great for some people and unnecessary for others. It’s important to do your research, know your options, and avoid getting rushed or pressured into buying the wrong one. That way you’ll be empowered to make the best decision for you and your circumstances.


Image by trenttsd via Flickr, licensed under CC BY 2.0.


  1. A basic warranty may cover the power train including the engine, transmission and CV (constant velocity) joints along with some major components such as the radiator and the steering system. A more comprehensive warranty can offer repair or replacement protection for additional components like the air conditioning and the electrical systems.

  2. Before putting money down for extended warranty, check what is covered, first. A lot of the time, the parts that are likely to break down are not actually covered by the warranty, so you take it out for nothing. In addition, there are different coverage tiers, rising in expense proportionally with the amount of things covered. Is the price justified? Do you really need it? Decide before you buy.

  3. Thanks for explaining the basics of extended car warranties. My wife and I are in the market for a new car and this is a question that has come up in my mind. We are planning on driving this car for as long as it will go; for that reason, getting an extended warranty makes sense. I like your practical advice about deciding where to get the warranty. Thanks for the info!

  4. When it comes to purchasing an extended warranty, negotiation is fair game. Call different providers and see what they can offer you in terms of discounts or added bonuses. Once you reach out to a few different places, you’ll have a true idea of what the policy should actually cost and proper leverage to negotiate. It never hurts to ask.

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