Is it worth taking out an extended warranty on a car?
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. 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.Like most insurance policies, an extended warranty is something you pay for in the hope that you’ll never need to use it. For many owners, it’s worth paying the price for peace of mind; even if your car is built by a brand renowned for its reliability, there’s always a risk that something could go wrong.While extended car warranties typically cover many issues that may require parts of your car to be repaired or replaced, they don’t cover everything. For example, many extended warranties don’t cover things like accidents, theft, natural disasters, or normal wear and tear.Approximately 37 percent of car owners have an active extended warranty and only one in ten have actually used it. The two top reasons why people say they do not have an extended warranty is that they think the coverage is too expensive and that they will never use it.
Is an extended warranty a waste of money?
The warranty providers design these plans to be profitable. On average, customers pay more for the policy than they receive in covered repairs. Extended warranties are rarely a smart idea, especially if it’s a used car,” according to the consumer advocates at the Public Interest Research Group. 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.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.The answer depends on various factors, including the type of vehicle, whether or not your factory warranty has run out, the vehicle’s reliability, and your own risk tolerance. Extended warranties offer peace of mind by providing additional coverage beyond the manufacturer’s warranty.Negotiating a Better Deal Speak with the finance and insurance managers, explain that you want to buy a new car and need to talk to them about the factory extended warranty on the vehicle. You may find that three different dealerships will give you three different prices on the same coverage.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.
Should I cancel an extended warranty?
Reasons to cancel Cost: Warranties are often sold as a per-month purchase; some buyers later total the cost of the warranty over the length of the contract and discover it’s much more expensive than they were led to believe. Exclusions: Extended warranties don’t cover everything that can go wrong. You can cancel your extended warranty at any time, but full refunds are usually limited to the first 30 to 60 days. Most providers require you to follow specific steps outlined in your contract.Yes, you can. Nearly all extended warranty providers offer a cancellation option. The rules vary from contract to contract, but most plans make it possible to end your coverage as long as you follow the instructions listed in your agreement. Most extended warranties include two types of refund opportunities.Can you cancel an extended warranty at any time? Yes, you can cancel at any time, but the refund amount depends on how long you’ve had the coverage and whether you’ve filed any claims.The most direct way to cancel your extended warranty is to contact the accounting department at the dealership. The accounting department is usually responsible for processing the cancellation and refund paperwork, so this is the quickest way to complete the cancellation of your extended warranty.
What are the disadvantages of an extended warranty?
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. However, extended car warranties are often not worth it due to their high upfront price and coverage restrictions. The terms and conditions of coverage often make it more cost-effective for car buyers to cover the costs of repairs themselves rather than cover the warranty cost.It provides additional maintenance coverage once the factory warranty has expired. Consider an extended warranty as an added safety net. If your major powertrain warranty has lapsed and a major repair arises, the extended warranty will help cover the associated costs.This means you should expect to pay between $1,000 and $4,200 on a 36-month coverage term (paying for 18 months) for an extended warranty on a vehicle with more than 100,000 miles. As you put more mileage on your vehicle, the likelihood of needing a repair goes up, increasing the price you’ll pay for your warranty.Whilst it might be reassuring to have an extended warranty, they can come at a high price. And it still won’t necessarily cover everything that could go wrong. And, of course, you could find that the cost of the repair required was less than the price of the warranty. Or you may never need to use the warranty.
What’s the average cost of an extended warranty?
Extended auto warranties cost an average of $1,297 per year across providers, plans, coverage options and vehicles, based on our February 2025 secret shopping. Below, we provide estimates for bumper-to-bumper, mid-level and powertrain warranty coverage based on quotes we received during our secret shopping experience. 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.