Is it good to get an extended warranty on a car?
You might consider an extended car warranty if you’re purchasing a high-mileage vehicle. However, extended car warranties are often not worth it due to their high upfront price and coverage restrictions. Extended warranties offer protection beyond the standard warranty. The likelihood of needing an extended warranty is low, especially if the product is durable and reliable. The cost of an extended warranty may be more than the cost of repair or replacement of the product.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.Extended warranties are great for people who want to be prepared for possible repairs that may be needed once the factory warranty expires. Keep in mind there is a difference between third party and factory warranties. In the past, we have not recommended third party warranties because they are inconvenient to use.Probably not. 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.
What is not covered under an extended warranty?
Wear and tear on parts like brakes, tires, and batteries is not covered by extended warranties. Warranties often don’t cover parts that wear out over time. This means you’ll have to pay for regular maintenance, which can cost over $10,000 a year. 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.If you plan to keep your new car for a long time and want the peace of mind of knowing you’re covered for repairs, an extended warranty may be worth it. However, if you tend to trade in your vehicle every few years, you may not get the full value out of an extended warranty.The cost of your extended vehicle warranty depends on a variety of factors, like the make, model and age of your car. However, you’ll typically need to pay at least $1,000 per year of coverage, and you may need to pay as much as $3,000 per year, or even more.An extended warranty price represents a percentage of the total product cost. As a general rule of thumb, you shouldn’t spend more than 30% of the product cost on a product warranty.
Is it worth paying for extended warranties?
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. 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.Failure to Perform Regular Maintenance: One of the primary reasons for an extended warranty void is the failure to follow the manufacturer’s recommended maintenance schedule. Regular maintenance, such as oil changes, filter replacements, and scheduled inspections.Powertrain and bumper-to-bumper warranties typically cover transmission issues. An extended warranty covers transmission failure after your factory warranty runs out, but not for preexisting conditions.Common Reasons an Extended Warranty Claim is Denied The most common reason warranty claims are denied is that whatever is broken is not covered. Every warranty comes with a list of what is, and is not covered, so it’s important that you understand what’s going on before filing a claim.
How much should an extended warranty cost on a new car?
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. Manufacturers and third-party providers don’t have set rates for extended warranty costs. Extended warranties can be expensive, and the upfront cost may outweigh the potential benefits. If the warranty price is high compared to the average repair costs for your car model, it may not be worth the investment. Consider evaluating your budget and repair history before making a decision.Second, you’ll have to pay interest on the purchase, which can get expensive. Finally, an extended warranty contract on a new car doesn’t add anything to the car’s value. Instead, it raises your loan-to-value ratio and puts you at risk of owning more on the vehicle than it’s worth.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.Extended Warranty Statistics Over 86 percent bought their service contract when they bought the car. Approximately 37 percent of car owners have an active extended warranty and only one in ten have actually used it.