When it comes to the long-term cost of your car, extended warranties are usually “a bad deal,” says Gillis. In a Consumer Reports survey, 55% of people who purchased an extended warranty never touched it. Among those who did use the warranty, most saved less on repairs than they paid for the contract. One of the reasons why extended warranties are worthwhile is that it makes the repair process much easier.
No matter how much the cost of parts fluctuates over time or location, the total cost of car repair should be covered in any way. More comprehensive car warranties will cover more faults, such as some wear coverages, but will be more expensive. You would have to weigh whether it is worth paying the extra cost or whether it would be cheaper to pay for repairs yourself if a problem appears. Almost all new cars come with a defense-to-bumper warranty of at least three years and 36,000 miles.
For many brands, the warranty is even longer. Many drivers believe that extended car warranties are worthwhile, if only for the peace of mind they provide. With an extended car warranty, you don't have to worry about whether you can afford mechanical repairs after the factory warranty expires. In fact, according to a survey by Pegasystems Inc.
, warranty length varies by manufacturer, but many offer comprehensive warranties for three years or 36,000 miles, whichever comes first. Many warranty companies also offer enhanced powertrain warranties that include coverage for other major systems such as air conditioning and brakes. Nearly half of consumers who buy a new or used vehicle from a franchised dealer opt for an extended warranty, according to the National Association of Automobile Dealers. For example, if a part of your car that is not covered by the warranty fails and damages a part that is covered, all warranties will not be paid.
CARCHEX markets and sells extended warranties on behalf of third-party extended warranty providers, and your extended warranty will be between you and the supplier. With almost every extended auto warranty plan, you'll get extra benefits on top of the coverage you choose. Many extended car warranties are transferable for a small fee, which means you can provide the new owner with comprehensive vehicle protection. While there is some overlap between car warranties and breakdown coverage, they are not exactly the same.
If you keep or lease your car for less than the duration of factory coverage, don't repeat, you don't need an extended warranty. The warranties do not cover oil changes, brake work, tires or other “wear items”, that is, things that are subject to wear. Regardless of whether you have a new or used car, extended warranties are perfect if you need additional coverage or can't afford unexpected repair costs. It's also worth noting that Extended Vehicle Care is technically a vehicle service plan, offering the same coverage as an extended warranty.
Although commonly referred to as extended warranties, the correct term is extended service contracts. You'll need to consider the reliability of your vehicle, as well as your ability to pay for repairs directly to determine if an extended warranty is the best option for you. For more information, see WalletHub's guides on mechanical breakdown insurance and extended car warranties. An extended warranty can also be worthwhile if you value peace of mind when budgeting repair costs.