Is it worth getting extra warranty on a used car?
Used car warranties work a bit like insurance. You’re basically betting that the cost of the warranty will be less than the repair bills you might face. The real value, though, is the peace of mind. Knowing that if something major, such as your engine or gearbox, breaks down, you won’t be stuck with a huge bill. Warranties are simply a waste of money. It’s better to keep the money you’d spend on a home warranty in your pocket and save it to pay for repairs on your own,” Ramsey wrote. That way, you can control the whole process and make sure you get appliances that are right for you and your family’s needs.Some disadvantages are that some warranty companies impose dollar limits per repair, require a service call fee for each issue, can deny claims if items are not properly maintained, and cannot determine whether to fix or replace the system or item.
Is an extended warranty worth it on a vehicle?
Protection from expensive repairs, predictable costs, and peace of mind are just some of the benefits that make extended warranties worth considering. However, if you frequently trade in or lease a new vehicle, or if you can afford unexpected repairs comfortably on your own, an extended warranty may not be necessary. The benefits of an extended warranty The advantages of this are that you gain the peace of mind of being able to cover the cost of certain repairs to your vehicle for the period of the warranty. Your used car could prove to be troublesome, and a warranty is a way to avoid risk.For most buyers, the high cost of an extended warranty for a used car outweighs the potential benefits. The warranty providers design these plans to be profitable. On average, customers pay more for the policy than they receive in covered repairs.Extended warranty plans typically cover your vehicle anywhere from 2 to 7 years. If you expect to keep your car for several years, a longer plan may make sense for you. Even if you do sell your car before the warranty runs out, your extended protection plan may be transferable.An extended warranty typically costs an average of $600 to $2,000 per year, but that varies widely based on where you buy the warranty, the reliability of the vehicle the warranty covers, and other factors. The price of an extended warranty also is negotiable.Cons of an Extended Warranty Extended warranties require an upfront payment or are added to your financing, increasing your total cost. If you don’t end up using it, you may feel like you paid for something you didn’t need. Depending on the warranty plan, some repairs may not be included.
Is an extended warranty worth it on older cars?
It might seem obvious, but it’s worth spelling out: investing in an extended auto warranty for an older car is highly recommended. Whether you use your car a lot or not, components naturally deteriorate over time, and the older your vehicle, the closer everything under your hood will be to breaking down. The typical auto warranty coverage is 3 years/36,000 miles. That means the warranty would cover needed repairs in the first three years you own your car or for the first 36,000 miles you drive it, whichever comes first. And for most of us, the mileage limit comes first.As of March 2025, the longest new car warranties are 10 years, which are held by Nissan, Mitsubishi and MG, but Nissan and Mitsubishi do have caveats.These warranties usually last 12-24 months and tend to be pretty comprehensive – but you should always check what the warranty does and does not cover with the dealer. Independent dealerships may offer their own “dealer-provided warranty” on used cars you buy from them.
Is extended warranty a rip-off?
You’re effectively paying upfront for protection you may never use. Extended dealer warranties also come with plenty of fine print. They often exclude everyday wear and tear, common modifications and key parts or systems. How to get your money back. You can cancel an extended warranty at any time and you’ll get a prorated refund for the unused portion of your policy. If the warranty was included in your loan, your car payment won’t drop, but you may pay off the car sooner after the refund is deducted from your balance.Generally, these warranties come with a higher profit margin, giving you the chance to negotiate as much as you can. Just like the price of the car, dealerships may increase the cost of the extended warranty coverage plan for their profit.Will my car payment decrease if I cancel an extended warranty? If your warranty was included in your financing, your monthly payment will not decrease, but the refund may be applied toward your loan balance.An extended warranty won’t cover wear and tear or car accident repairs. Extended warranties are a gamble. You pay the full fee up front without knowing whether you’ll use the coverage, and you may need to purchase separate extended warranties for your car’s different systems.
What does Dave Ramsey say about extended warranty?
Instead of buying a bunch of extended warranties that you’ll probably never use, you’re better off self-insuring by paying yourself the warranty payments. That way, if your TV does break after the normal warranty, you have the money saved to fix it. If not, it’s your money to keep. It’s a win-win! Like all warranties, though, extended warranties tend to have exclusions that you have to be aware of. Things like wear-and-tear items, maintenance, and cosmetic components are generally not covered, and it is important to understand what exclusions your plan has.Just like when you negotiate when buying a car, don’t be afraid to negotiate the price of an extended warranty. At dealerships, salespeople or finance managers may inflate the cost of the extended car warranty. Inform them the price is too high, and if they can lower it, you may reconsider.
What are red flags in extended warranties?
What are red flags in extended warranties? Common red flags of car warranty scams include unsolicited communications claiming your warranty is expiring, scare tactics, ambiguous coverage details, and pressure to pay upfront or divulge personal information. Having a used car warranty intact can also increase the resale value of a used car. The warranties, however, can be expensive, and the cost of the warranty may not be worth it if the car doesn’t require significant repairs. Many warranties also have strict terms and conditions with lots of caveats (as covered above).If your new car has a serious warranty defect that the manufacturer cannot fix, even after multiple attempts, you may be eligible to get your vehicle repurchased or replaced.