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Landon Mitchell
Landon Mitchell

Should I Buy Extended Warranty On New Car

Buying a new or used car involves lots of decisions. What color do you want? How will you finance your purchase? Should you buy an extended warranty? An extended warranty can give you peace of mind after buying a new or used car, but these agreements have their limits and aren't always worth the cost. Learn how extended warranties work, when you may want one and other ways to cover the cost of car repairs.

should i buy extended warranty on new car

New vehicles are covered by the manufacturer's warranty (or factory warranty) for a certain number of years or miles. Factory warranties are free and usually include both bumper-to-bumper and powertrain warranties.

Powertrain warranties cover the parts that put the vehicle in motion, including the engine, transmission, driveshaft, axles and differential. The average powertrain warranty lasts five years or 60,000 miles, whichever comes first.

You can buy extended warranties from auto dealers, vehicle manufacturers and independent companies. Dealers often suggest purchasing an extended warranty when you buy a car, but you can buy one at any time.

The cost of extended warranties varies depending on coverage, warranty length, the vehicle's predicted reliability and other factors. Warranty companies aren't regulated the way insurance companies are, so there are no restrictions on what they can charge. A recent survey reports the median price of an extended warranty was $2,458, but prices ranged from $1,615 to $3,208.

It's generally best not to buy an extended warranty at the time you buy a car, since you won't use it for several years. Wait until the manufacturer's warranty is nearing expiration or the deadline to purchase coverage is approaching.

Similar to an extended warranty, car repair insurance covers mechanical breakdowns and repairs that car insurance doesn't pay for. Car repair insurance is usually limited to newer cars, so it's not an option for everyone. However, it generally costs less than an extended warranty.

Purchasing a new car with a long factory warranty can help safeguard against expensive repairs. Hyundai, Kia and Mitsubishi vehicles all boast bumper-to-bumper warranties of five years or 60,000 miles and powertrain warranties of 10 years or 100,000 miles, whichever comes first.

Rather than purchase an extended warranty, your money might be better spent paying a bit more for a car whose predicted reliability is better than average. (Consumer Reports and J.D. Power are good sources of reliability data.) Then follow manufacturer recommendations for regular maintenance to keep your car in good shape.

The length of the warranty varies by manufacturer, but many offer bumper-to-bumper warranties for three years or 36,000 miles, whichever comes first. Powertrain warranties may last for up to 60 months or 60,000 miles.

I have gone over a decade without buying an extended warranty. Along the way, I learned a thing or two about the practice which seems to dominate the time and energies of associates and salespeople at many retail locations. The extended warranty market is big business. In fact, companies often outsource extended warranties to larger insurance companies. These companies then stuff these policies with limitations and conditions designed to make it more difficult to actually make a successful claim.

The salesperson selling the policy also typically gets a bonus or commission. And of course, the insurance company backing it makes money. All of this should give you a very clear picture that an extended warranty is NOT in the best interest of the end-user.

Extended car warranties can be a saving grace when you experience a mechanical breakdown, but they can also add a few thousand dollars to your cost of vehicle ownership. At the end of the day, are extended car warranties worth it?

An extended car warranty, or vehicle service contract, promises to pay for certain car repair costs after your factory warranty expires in exchange for an upfront or monthly payment. Unlike a car insurance policy which covers you in the event of a collision, extended car warranties protect against mechanical breakdowns or manufacturer defects in materials or workmanship.

Bumper-to-bumper coverage is similar to the factory warranty on a new vehicle, covering most car parts in the event of mechanical failure. These are also known as exclusionary warranties because they cover everything except for a few named components. Bumper-to-bumper warranties are typically the most expensive coverage plans a provider offers.

Many warranty companies also offer levels of coverage in between these. Sometimes called enhanced powertrain warranties, these warranties cover other major systems, such as air conditioning and brakes.

Extended warranty plans pay for parts and labor for covered repairs, leaving you responsible only for your coverage premiums and your deductible. You can also end up saving money in the long run if you use your extended warranty coverage multiple times or have an exceptionally large repair.

Based on our research, a good price for an extended warranty is anywhere from about $1,700 to $3,000. The reason for such a wide range is that costs are highly variable and dependent on your vehicle, the company you buy your plan from, and the choices you make about your coverage.

For example, according to our research, a five-year full-coverage warranty for a new Toyota Camry may cost you between $1,700 and $2,500. If you skip the extended coverage and pay for Toyota repairs out of pocket, you may end up paying about $2,200 over five years.

You can determine whether an extended car warranty would be worth it for your vehicle by looking at average repair costs on RepairPal and comparing the data with quotes from multiple extended warranty companies.

Some auto insurance companies sell mechanical breakdown insurance (MBI) as a policy add-on. These function in a similar way to extended warranties, covering the cost of mechanical repairs when needed.

Third-party warranty providers tend to offer more flexibility than manufacturers in terms of cost, repair shop availability, and coverage options. Reputable extended warranty companies can offer term lengths up to 15 years and 250,000 miles, depending on the provider. Drivers who plan on sticking with their car for the long-haul would definitely benefit from such a long coverage plan.

In many cases, an extended car warranty may be worth the cost. If your vehicle needs major repairs to the drivetrain or other critical components, those costs could easily exceed the cost of the protection plan and save you money.

Endurance has six different coverage plans to choose from, which can last up to 15 years and 200,000+ miles. It also offers the best benefits package in the industry, which you can read about in our full Endurance warranty review.

An extended warranty for your car has a few disadvantages despite having many upsides. The main disadvantage is that you may not use the coverage you pay for. Some low-quality providers can also be a hassle to deal with and may make it difficult to use your coverage.

Our expert review team takes satisfaction in providing accurate and unbiased information. We identified the following rating categories based on consumer survey data and conducted extensive research to formulate rankings of the best extended auto warranty providers.

Each year, our research team collects hundreds of data points on warranty companies to rank the most reputable providers. We compare quotes and customer service through secret shopping, evaluate contract transparency, and analyze warranty coverage options. After our industrywide review, we found the best extended warranty companies to be:

This rating is based on types of extended warranty plans available, coverage terms, and added benefits like roadside assistance. A company scores high if it offers more than three plans and mileage limits over 150,000 miles. We also note if a company offers coverage for maintenance items like brake pads, because this is uncommon in the industry.

Transparency is an important quality to look for in extended warranty providers. Some companies make it easy to find sample contracts and read the fine print, while others make it difficult. Our transparency score takes into account sample contract accessibility as well as the presence of a money-back guarantee.

Our goal is to present a range of reputable extended car warranty providers for shoppers to compare. There is no one-size-fits-all answer. However, there are a number of extended car warranty companies that rise above the rest. We will review our top picks in this article.

Our team surveyed 1,000 extended warranty customers to learn what matters to consumers. When asked which factors are most important when purchasing an extended warranty, most respondents said coverage was the most important factor. Here are the top five things people look for when shopping for extended coverage:

These answers influenced how we weighted different categories of our methodology. We also asked customers if they were satisfied with their extended warranties or not. Overall, 65% were satisfied, while 13% were dissatisfied to some degree.

You can get extended warranties from manufacturers, like Honda and Ford, or from third-party companies like Endurance and CarShield. Manufacturer extended warranties offer factory-trained technicians and OEM parts, but they require you to visit a dealership for repairs and may not last as long as third-party options. Below are a few pros and cons of each.

Reputable extended car warranty company that offers six levels of coverage and has excellent customer reviews. It is our choice for Best Coverage and our top overall pick for extended warranty providers.

In the extended warranty industry, $50 a month is a great monthly payment. All the ForeverCar quotes our team received were around $50 per month for 36 months. Plans last three years regardless of mileage, so once the payment is over, the plan is over. Once your plan expires, you can reapply and start another contract if your car is still eligible. 041b061a72


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