If your new car came with a three-year/36,000-mile manufacturer’s warranty that’s about to expire, you may be considering if you should get an extended warranty to help cover unexpected repairs.
Here, we’ll take a look at different types of extended car warranties, the factors that affect cost, and ultimately whether extended protection is right for you. We’ve also included reviews of the best extended car warranty providers, so you can shop for a protection plan that gives you the best possible coverage and peace of mind.
Is An Extended Car Warranty Worth It?
An extended warranty, also known as a vehicle service contract, is a contract between you and a provider designed to protect your car from costly repairs. Generally, you make small, monthly payments toward your contract and pay a deductible if and when you need covered services from a mechanic.
Buying an extended warranty is a gamble – investing in an extended warranty gives you peace of mind and provides coverage in case of a mechanical breakdown, but you may not end up needing it. So if you think you can save your money, know that you risk paying a lot more out of pocket if your car breaks down.
How Much Does An Extended Warranty Cost?
There’s no one-size-fits-all answer when it comes to the cost of warranty. Warranty costs can range from a few hundred dollars to well over $1,000 a year. There are many different factors that play a role in the cost of an extended vehicle warranty, including:
- Age of the vehicle
- Mileage of the vehicle
- Buying from a dealership versus a third-party provider
- Vehicle year, make, and model
- Level of coverage
- Number of high-tech components in the vehicle
- Driving habits and routine vehicle maintenance
- Deductible set
Common Car Repairs And Costs
Owning a car is expensive. You already pay enough for car insurance, fuel, and regular maintenance, like oil changes, to also have to worry about unexpected cost of repairs. Without an extended warranty, these are some common repairs you may face and would have to pay out of pocket, according to data from the 2019 CarMD Vehicle Health Index.
| Repair | Average Cost |
|---|---|
| Ignition Coil and Spark Plug Replacement | $391 |
| Catalytic Converter Replacement | $1,371 |
| Mass Air Flow (MAF) Sensor Replacement | $341 |
| Fuel Injector Replacement | $450 |
On top of common repairs, there’s always the chance that your car could experience a larger issue. For example, you might need to replace an engine, which CarMD estimates could cost $7,150, or a transmission assembly, which it estimates at $3,905.
How Do Extended Warranty Deductibles Work?
Both dealership and third-party extended warranties come with a deductible, which is the amount of money you’re responsible for paying on a covered repair.
If your deductible is $100 for a covered repair that will cost a total of $2,000, you would pay $100 toward the mechanic’s fee, while your warranty covers the remaining $1,900.
Your actual deductible will depend on the provider and warranty plan you select. Some third-party providers offer plans with deductibles as low as $0 that require nothing out of pocket when your car needs a covered repair.
Dealer Extended Warranties Vs. Third-Party Warranties
There are plenty of good reasons to purchase a car from a dealership, but your extended auto warranty doesn’t have to come from a car dealer. In fact, dealership vehicle service contracts often come with both restrictions and added costs. Limitations may include:
| Limitations | Details |
|---|---|
| Increased Total Cost | Dealerships offer extended warranties with a high retail markup. A warranty that costs $800, for example, might cost $2,500 from a dealership. |
| Hidden Interest | In addition to being more expensive up front, a dealership extended warranty often involves rolling the cost into your vehicle financing. This might seem like a convenient way to pay for your warranty, but unfortunately, you’re also going to be paying interest. This could add potentially hundreds of dollars to the cost of your extended warranty over the life of your auto loan. |
| Limited Repair Shops | An extended warranty from a dealer requires you to have covered repairs completed by the dealership. You may be able to go to another dealer of the same automaker, but this still greatly limits your repair options – for example, if you don’t live close to a dealership and experience a breakdown. |
| Limited Coverage Options | Most dealership extended car warranties are limited in plan options. Generally, your coverage choices include a comprehensive plan, an intermediate plan, and a basic powertrain plan. |
| Vehicle Restrictions | You’re not going to be able to get a dealership extended auto warranty on an older vehicle or one with higher miles. Sometimes, dealerships don’t offer extended warranties once the manufacturer’s warranty expires. This means you probably can’t protect your car with 100,000 miles using a vehicle service contract from a dealership. |
You don’t always have to buy an extended vehicle warranty from your dealer at the time you purchase your car. Some dealership representatives might claim you can only get a certain interest rate or financing approval if you buy your extended warranty at that time. This is not true.
Your search for the right extended protection should also take into account reputable third-party warranty companies. Unlike a dealership-branded service contract, a third-party warranty can offer flexibility in coverage and benefits like your choice of repair facility. Here are some of the top perks:
- Flexible pricing and payments: Third-party warranty companies offer a range of coverage levels and pricing models to fit almost any budget. A third-party service contract also won’t have the markup of a dealership contract. Most warranty providers offer monthly payment plans, but third-party contracts won’t have the added interest of an auto loan.
- Choice of repair shop: You won’t be limited to a dealership service center under a third-party extended warranty. Instead, you’ll be able to choose from any licensed repair shop for your covered repairs.
- Variety of coverage options: Many third-party vehicle service contracts allow you to customize your coverage. Some provide multiple plans within each level of coverage, making it easy to find the protection plan that’s right for your car and budget.
- Coverage for most vehicles: Depending on your provider, it is possible to obtain coverage for a vehicle with well over 100,000 miles. Dealerships don’t normally have coverage options for cars with high mileage. With car owners keeping their vehicles longer now more than ever, according to USA Today, it’s important to have the option to protect an older vehicle from expensive breakdowns.
- Additional perks: Many extended warranty providers will cover the cost of roadside assistance and towing in cause you break down on the side of the road, as well as provide rental car reimbursement.
The Best Extended Warranty Providers
Don’t be wary of extended warranties because of scam warranty companies. These scammers contact you to let you know that your vehicle is no longer protected by a warranty. The salesperson pressures you to buy an extended warranty contract, usually at a high price. When it comes time to get a repair, the company may have dissolved or gone out of business.
You can protect yourself from these scams by researching auto warranty companies before making a purchase. Reputable and trustworthy third-party warranty providers won’t use high-pressure sales tactics to get you to buy service contracts.
To help you make an educated decision, we analyzed some of the top providers to find the most reputable extended car warranty companies.
| Motor1 Rating | Coverage Levels | Years in Business | Industry Standing Rating | Insurance-Backed Plans | ||
|---|---|---|---|---|---|---|
| Endurance | 5 | 6 | 15 | 4.3 | ✔ | Get Quote |
| CARCHEX | 4 | 5 | 22 | 5 | ✔ | Get Quote |
| Protect My Car | 4 | 3 | 16 | 4 | ✔ | Get Quote |
#1 Endurance: Best Coverage
Endurance is our best coverage provider, having earned 4.6 out of 5.0 stars. This provider stands out because they provide direct coverage, instead of partnering with another provider, as many companies do. That means that claims are processed more quickly and smoothly.
Endurance offers six levels of extended car warranty coverage, ranging from powertrain warranty to bumper-to-bumper coverage. Depending on the coverage option you choose, you are able to get up to 8 years or 200,000+ miles of warranty coverage, making it a great choice for high-mileage and used cars.
Read about the cost and coverage options in our Endurance review.
#2 CARCHEX: Best For Used Cars
CARCHEX is one of the most trustworthy extended warranty providers, with endorsements from brands like Kelley Blue Book, Carfax, and Edmunds.com. CARCHEX also ranked the highest in respect to customer service, making it our number two choice.
To learn more about five coverage plans, read our CARCHEX review.
#3 Protect My Car: Best Maintenance Benefits
Protect My Car was awarded the Best Maintenance Benefits award, as the company’s Ambassador Program includes free oil changes and tire rotations, which can save you time and hassle with routine servicing. The program also guarantees up to 75 percent off covered repairs, lock out services, and 24/7 roadside assistance.
Learn more about the extended warranty company in our Protect My Car review.
Is An Extended Car Warranty Worth It?
As long as you do your research and understand your contract, an extended vehicle warranty can be a smart buy. To find the service contract that’s right for you, you’ll need to research plan and pricing options.
One of the best ways to make sure an extended warranty is worth it is to get a quote directly from a warranty provider. Ask the provider what plan options are available for your vehicle and thoroughly read the fine print of your contract before signing up. The best providers will offer you a free quote and answer all of your questions and concerns in a straightforward manner without pressuring you to buy.
Get a free quote from our top picks below to see who offers the right coverage at the best price: