Sometimes, used cars come with an extended warranty (this is rare) if they are certified used, or car dealers sometimes offer to sell you an extension along with your vehicle. If you buy a car from a person, you generally won't have an extended warranty. Nearly all new cars come with a warranty of at least three years and 36,000 miles. For many brands, the warranty is even longer.
When you buy a new or low-mileage car, it may be covered by the manufacturer's warranty. This warranty makes the car manufacturer responsible for covering the cost of certain repairs if something breaks. You can also purchase an extended warranty for cars that extends the warranty period offered by the manufacturer. An extended car warranty can be useful if the car has high mileage or beyond the manufacturer's warranty.
You can purchase extended warranties from car dealers, vehicle manufacturers, and independent companies. Dealers often suggest buying an extended warranty when buying a car, but you can buy one at any time. If you have an extended warranty and one of the parts or systems in your car breaks down, you can take it to an authorized dealer or mechanic and have it repaired at no or very low cost. If you plan to keep your car until its wheels fall off, you might consider buying an extended warranty to cover repairs in the fifth and sixth year or more.
While there are some cases where it might make sense to extend the warranty, it may make more sense to save money each month so that you can cover the cost of repairs yourself in case something breaks. As a wise friend of mine who knew the automotive industry well enough used to say: “I am willing to roll the dice. If you keep or lease your car for less than the duration of the factory coverage, you don't repeat or need an extended warranty. While extended warranties are an option, there are insurance coverages that can cover many of the same things, often at a lower cost.
Know that extended warranties are not considered guarantees under federal regulations and lack the legal protection of true warranties. Buying the warranty when buying the car is easier, of course; you can include the cost in your monthly payment. It's generally best not to buy an extended warranty when buying a car, since you won't be using it for several years. Mechanical breakdown insurance is a type of coverage that can replace the extended car warranty.
Extended warranty coverage can vary greatly, so be sure to carefully review the details of the specific warranty before buying. A veteran car dealer recently told me that only 1 in 10 people who buy extended warranties end up using them. Rather than buying an extended warranty, you'd be better off spending your money on paying a little more for a car whose expected reliability is better than average.
