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Should you buy an extended car warranty?

Most car buyers spend a significant amount of time researching the best car brands and reading up on ways to get a good deal at the dealership, but few car buyers know to do research before they buy an extended car warranty.

Consumers often end up overpaying for extended car warranties, or not investing in one, primarily due to misinformation. As Consumer Reports surveys have pointed out in recent years, plenty of extended car warranties charge customers more than what they receive in benefits.

The unbelievable lack of transparency when it comes to purchasing extended car warranties unfortunately makes it easy for people to fall into a bad extended service plan.

Here we hope to guide you through extended car warranties and better options like a Vehicle Repair Protection subscription so you can make the best decision when you decide to get coverage.

Manufacturer’s warranty vs. extended car warranty

When you buy a car, it almost always comes with a manufacturer’s warranty (or OEM warranty). So whatever make your car is (eg. Chevrolet, Ford or Toyota), that’s who provides the manufacturer’s warranty.

This warranty is a contract between the vehicle’s manufacturer and you, the owner of the recently purchased vehicle. The manufacturer essentially promises to repair or replace essential car components affected by factory defects for a certain period of time. 

Most of these contracts last for two to three years and have a set mileage limit. For example, the 2020 Ford Warranty is 3 years/36,000 miles for bumper-to-bumper coverage. Typically you need to return to the dealership to have vehicle repairs done. 

An extended car warranty or vehicle service contract is simply a contract that extends the same protection that your manufacturer’s car warranty provided but for a longer period of time. These can be purchased at the dealership or through an independent company that’s not affiliated with your car’s manufacturer, such as

Depending on the company and plan you choose, you can have far more options for coverage than you had with your manufacturer’s warranty. There are many other benefits to purchasing with an independent company, such as price, month-to-month subscriptions rather than long term contracts, and fewer limitations on where you can get repairs. 

Keep in mind that although the term “extended warranty” is widely used, the different types of coverage are technically called vehicle service contracts. For a service to be called a “warranty” it must be provided by the original manufacturer of a product.

In general, there are three basic types of extended car warranties and they cover different parts of your car:

What exactly does an extended car warranty cover?

Bumper-to-bumper coverage is a type of comprehensive extended warranty that will typically cover all parts and systems on a vehicle in case of a mechanical breakdown. This will exclude “wear items” (for example, windshield wipers, tires, wheels, routine maintenance, etc.)
Powertrain coverage is a type of extended warranty that will typically cover just a vehicle’s engine, transmission, the driveshaft, differentials and axles (essentially all of the components from the engine making wheels rotate) in case of a mechanical breakdown.
Corrosion/rust coverage is a type of extended warranty that will typically cover premature deterioration of a vehicle’s sheet metal.

Additional coverage like key and fob replacements, tire and wheel replacements and technology protection (navigation, bluetooth, audiosystems, etc.) provides 360 protection for your vehicle.

Some may also provide helpful services like 24/7 roadside assistance and repair shop assistance, meaning the warranty provider deals directly with the repair shop without you paying the repair bill upfront or having to negotiate prices. This is a big incentive for a lot of extended car warranty customers since three out of four Americans fear having to deal with the repair shop.

Is buying an extended car warranty mandatory?

Unlike car insurance, having an extended car warranty is not mandatory by law. However, they can make a big impact in protecting your wallet. Drivers choose to buy one to be covered for repairs that tend to be a big sudden expense. 

AAA survey determined 33% of Americans would need to go into debt to pay for a sudden car repair. Due to the state of the current economy, it’s very likely that number has risen since that survey was conducted. For this reason, an extended car warranty can be a lifesaver for a lot of people. It helps keep your car on the road without paying a costly repair bill out of pocket, putting the repairs on your credit card or borrowing money from friends/family.

Extended warranty cost factors

There are five factors that determine the cost of your extended warranty:
  1. Car age - How old your car is will be factored into the price of any extended car warranty you buy.
  2. Car mileage - Cars with higher mileage (80,000+) are more prone to needing repairs, so this might make the price go up (note: some extended car warranties don’t even offer coverage on high-mileage vehicles).
  3. Car make/model - Luxury brand models have a higher extended car warranty price since their parts and repairs are usually more expensive.
  4. Coverage level - Extended car warranties normally offer different levels of coverage. The more parts/repairs you cover, the more you’ll have to pay.
  5. Seller - Where you purchase your extended warranty is typically the largest factor in the price you will pay. In an industry that lacks price transparency and where salespeople often put $2,000 or more in markups, you may be overpaying for a warranty that should cost way less.

What are the risks of not buying an extended car warranty on your car?

When you drive without an extended car warranty, your two biggest risks are:

  1. Driving without getting necessary repairs (which can lead to bigger mechanical issues or accidents, in the worst cases), and
  2. Getting the necessary repairs but having to pay a huge repair bill 

In the U.S., the average car repair bill is between $500-$600. For major repairs, the average prices can be much higher:

Price estimates of the most common repairs a good extended car warranty would cover

For many people, having coverage for when things go wrong can really pay off in the end. Paying a low fixed fee every month allows for better financial control and protection from paying hundreds or even thousands of dollars at once.

How can you make sure you’re buying an extended car warranty that’s worth it?

You have to be very careful to not fall prey to pushy salespeople who try to sell you overpriced warranties under premises like “This deal is only available for you today” or “We can drop $300 off the down payment if you buy in the next hour!” or the age-old favorite “I can’t believe my manager approved going this low on the price”. These are just sales tactics to pressure you into buying one at that moment. 

Know that you have options, and the more research you do on them the better. An extended car warranty is supposed to make your life easier, not the other way around.

Here are the top three ways to be sure you’re buying an extended car warranty that’s worth it:

1.Take your time

It doesn’t make sense to buy an extended warranty too early. You want to look into buying one just before your manufacturer’s warranty expires. Remember, you don’t have to buy as soon as you buy the car at the dealership.

2. Ask for a price quote in writing 

Companies who don’t offer transparent pricing and coverage are hard to trust. Many dishonest extended car warranty companies keep you in the dark about how much of your payment goes into your coverage so that they can add huge price markups. Most won’t provide you a quote that you can easily compare to others or will try to force you to buy over the phone on a first call.

3. Read the fine print 

Blindly trusting what an extended warranty salesperson promises isn’t a good idea. Your contract may have big upfront costs, hidden fees and deductibles that aren’t advertised online. Read the fine print carefully for important information like the annual mileage limits, how many miles you’re covered for and if you can cancel and/or get a refund.

What is Vehicle Repair Protection?

Vehicle Repair Protection is a new kind of extended car warranty. It’s a low-cost monthly subscription that provides benefits you won’t find with any other extended car warranty:
  • Convenient:100% online and easy sign up in less than 5 minutes.
  • Trustworthy: No pushy salespeople. No big markups.
  • Transparent: Get a custom quote online instantly and see exactly what is covered. No hidden fees or expensive down payments.
  • Repair shop support: You choose any repair shop. works with them directly so you don’t have to.
  • Flexible: No long-term contracts, only month-to-month subscriptions. Cancel anytime with no penalty and you’re backed by our best in the industry 90-day money back guarantee.

Find the best extended car warranty price for your car

Why choose’s Vehicle Repair Protection?

Get a custom quote instantly. 100% online. No pushy salespeople or robocalls.