Should You Buy An Extended Car Warranty?

should I buy an extended warrantyIf you just test drove a new car and are strongly considering buying it, then you’re probably feeling really good right now. But it’s not going to be long before you are ushered into the finance department to sign the paperwork. It is at this point that you will have to decide whether or not to purchase an extended auto warranty. If you are not expected to be presented with this option, you may find yourself confused. Although it may not seem like it, this is a big decision that will affect you at the time of your purchase as well as for many years to come. Generally speaking, an extended warranty is more or less an insurance policy for your vehicle. If something goes wrong within the warranty period you will not have to pay for the repair. The word “extended” is used because you are buying an additional warranty on top of the basic one that is offered by the manufacturer.

When deciding whether an extended warranty is right for you and your vehicle, ask yourself the following questions:

1. What type of warranty is included with your vehicle? For instance, every new Hyundai comes with a 10 year/100k mile warranty. Do you really need to add anything to this? On the other hand, there are manufacturers that only cover new vehicles for 3 years/36k miles. Ask yourself this question: is the included warranty in line with how long you plan on keeping your vehicle? If you are only going to drive your car for 36k miles, there is no reason to buy an extended warranty. This would be a waste of money.

2. What is the past reliability rating for the vehicle you are buying? While this is not a fool-proof method for making a decision, it is something to consider. If you are buying a model that is known for its reliability, such as a Honda Civic, you have a better chance of owning the car for many years without ever having to make a warranty claim. On the other hand, there are vehicles that have a poor reliability history. All of this information is readily available online at sites such as

3. Who is the company behind the extended car warranty? Some are backed by the manufacturer, whereas others are governed by a third party (these are usually aftermarket warranties). While manufacturer extended warranties are usually rated higher and offer more in terms of simplicity, aftermarket options are the cheaper of the two.

4. Is there a deductible? This is something you have to ask before purchasing any extended warranty. While it may not seem like a big deal, the cost of paying a deductible can quickly add up. There are many different ways that a deductible can be applied. For instance, are you paying a per visit deductible? Or are you being charged a per repair deductible? With the latter option, three repairs effectively means that you are paying the deductible three times.

5. Can repairs be performed at any dealer or repair shop? With some, you have to go to the dealer that you purchased the vehicle from. This is not a big deal if you live in the area and are willing to do business with the dealership. But if something changes, such as a move to a different part of the country, your warranty may become useless.


  • Longer coverage on top of the included warranty
  • Saves you money on repair bills in the future
  • Can be financed if purchased at the same time as your vehicle


  • Costs approximately $1,000 to $1,500 if purchased from the manufacturer
  • If not purchased at the same time as your vehicle you will have to pay cash. It cannot be lumped in with your loan
  • May never use the warranty if your vehicle never breaks

My Experience

Several years ago I purchased a Honda Accord along with an extended warranty for roughly $1,100. Although I was on the fence, I decided to buy, because I was looking for long-term peace of mind. The extended warranty covered my vehicle for 7 years/80k miles. Since I don’t drive a lot, I knew I would have coverage for the full seven years unless I decided to trade the car in.

So, what did I think? Well, I paid the $1,100 but never used the warranty. On the one hand, this was good because it meant that I purchased a highly reliable vehicle. On the other hand, I spent $1,100 and never got anything out of it. Of course, there was no way of knowing this at that point. That’s why you must consider it to be like an insurance premium. You may need to use it for a catastrophe or you may never use it at all. Also, you may want to lend some value to the peace of mind you get from knowing your car will be covered should anything go wrong.

Before deciding for or against an extended warranty, compare all of your options while also asking yourself the questions detailed above. The more informed you are, the better chance there is that you will make the right decision.

Have you ever purchased an extended warranty? Did it work out for you?

(photo credit: Jayel Aheram)

  • Karmella

    I had the same experience as you!! (Although with a Civic.) I sometimes wish I had not spent that $1100 – okay, I wish that every time I think about it.

    When it comes time to buy the next car, I’ll take a look back here to your post and think it through more carefully…

    • Addf3

      Well, I wouldn’t 2nd guess yourself. You just never know what’s going to happen with a car, brand new or pre owned. Either could have issues. You could very well have needed to access that warranty. You’d be thankful you had it.
      It’s a gamble that’s all.

  • Mac

    The only time I like to gamble is with warranties. When offered a warranty for my last two cars, a Prius & a Hyundai Sonata, I passed each time. It was tempting though as the salespeople really know what to say to make it sound like a great deal. But I know that if I purchased the warranty, I’d probably hope that the car breaks down during the warranty period so that the money would have been well spent!

    Instead, put the money you were going to spend into a car maintenance fund. If any repairs are needed, use that money. If not, well, you saved some cash. Of course, this is easily said than done.

  • Em D.

    I’m assuming the warranties don’t cover basic maintenance. My family buys reliable cars and stays on top of the maintenance schedule. My Avalon is 12 years old with over 160,000 miles and the only costs we’ve experienced are standard maintenance. I know this can’t protect you from all repairs but it certainly goes a long way to avoiding unnecessary car expenses.

  • Daddy Paul

    I would never buy an extended warranty. My 1997 Chevy Caviler got 200K miles on it when I sold it. I spent $37 on a hose on the transmission, 150 bucks for brakes and pads (I did them myself), plus tires oil and filter changes and gas. Why would I buy an extended warranty?

    • Mac

      …because you feel bad for the dealerships and want to throw them an extra grand for their vacation fund? I’m with you here. They’re banking on the fact that most customers will not take full advantage of the warranty and they’ll end up making money in the long run. The house always wins.

    • Winston

      If you know how to fix cars yourself, there is absolutely no need to buy an extended warranty. It is so much cheaper to do it yourself than go to repair shop. One time somebody made a huge dent to the side of my sister’s brand new Sentra. The insurance guy came to our house and made an estimate that the total repair would cost two thousand dollars and made her the check. Luckily for us, my dad knows a guy who knows car repairs and fixed the doors for only $500. Just like that, my sister made $1500.

  • Amanda

    I have to say that an extended warranty was a great investment on our 2005 Honda Odyssey. We did purchase the car used (it was certified) and the warranty cost us around $500. Our engine mount and power steering column both went kaput at the same time. Between the certified warranty (powertrain was only covered) and the additional one we purchased we did not have to pay a penny for well over $1000 worth of work.

  • jay

    My car came with 3 yr warranty. I had no regrets buying another 2 yrs extended warranty. After that, i may sell my car so i didn’t think of extending any further warranty. If any repairs req’d, I’d just go to a reputable workshop with decent prices.

  • Claudia

    Consumer Reports is also a great source. They frequently puts out articles and books on cars ans state that reliability ratings for cars. Look up your car before buying the warranty.

  • Winston

    When I bought my Pontiac, I didn’t buy extended warranty. Thank god I didn’t. For the past three years I have driven it, I have never experienced any problems that required major repair. Unless you are an aggressive driver, I don’t think you need to get one, ever. Of course, that is if you have bought a reliable car.

    • James Myster

      pontiacs are beast cars! 175k miles..and have NEVER been stranded, it never broke down…not even the battery.

    • James Myster

      pontiacs are beast cars! 175k miles..and have NEVER been stranded, it never broke down…not even the battery.

  • malandrin

    I purchase a new altima on december 2007 and i purchase the extended warranty for $2,500 it was for 10 years or 100,000 miles. By october 2010 i was in an accident and well my wreck altima was totalled it only had 22,000 miles on it and was still under the manufactures policy if i knew that was gona happen i havent had bought it in the first place but who can predict the future… Right? :-D

    • Tvintaloro

      If you bought the car and policy from a dealer then go back to the dealer with the insurance paperwork showing it was totaled and they will usually refund a prorated amount of the policy back That is exactly what I did when my 2007 altima was totaled with 40K miles on it.

    • Chay3003

      Nissan should have offered you GAP insurance…

    • fishmar


  • John

    Well I’m not a bel;iever in extended auto waranties or any others but the last 3 vehicles in our family they have paid for themselves many times over. Jeep Grand Cherokee – around $7,,000 to $8,000 in repairs that were paid for over the life of the warranty, Dodge Dakota – around $3,000 in paid for repairs, Toyota Avalon – shouldn’t need it at all, Right? So far, maybe $2,500 in paid for repairs. So, in my book, with my luck with cars, it has been worth it. The won’t pay for some items and if a non-covered item wipes out the entire engine, your out of luck.

  • b1-66er

    when chrysler announced discontinuation of the PT cruiser in 2008, i had a turbo convertible made to my specification … it came with a lifetime powertrain warranty and (after quite a bit of internet searching) i had the option of buying a lifetime bumper-to-bumper warranty wrap for about $1500.

    at this point i have 75K miles on the car and have saved over $1300 by buying the service contract.

    my plan is never to buy another car. all i have to do is keep it perfectly maintained and make sure i don’t wreck it. you can search for the “continual car” blog if you want to see all the gory details.

    • b1-66er

      my car is now at 100K miles … and i’ve now saved more than $1600 by purchasing the service contract. i keep a dedicated blog about it to document the upkeep of my car … you can google “continual car” if, for some freakish reason, you’d like to read the gritty details.

    • kickboyface

      me (b1-66er) again.

      i’m just having another set of work done on my car.

      at 80 months of use and 132K miles i’ve now saved over $7K by purchasing my service contract.

  • Car Warranty

    An extended car warranty is definitely worth it for the sole fact that one accident and it can sometimes pay for itself with that alone. Not to mention all the repair work that goes into cars normally.

  • Twetmor

    I have a 5 year 60,000 mike service contract from VW. If I don’t file a claim and keep the car until the end of the contract, I can get a complete refund minus a $50 admin fee. That is pretty low risk, for piece of mind. And if you read the details, it covers more than the original 3/36 warranty. Why wouldn’t I buy it?

  • Now a Ford Fan

    I filed a claim on an extended warranty from Toyota. Our 2005 RAV4’s engine melted down and needed to be completely replaced. At the time, the car was just shy of 5 years old and had 57,800 miles on it. The extended warranty company (3rd party) refused to cover the engine claiming we had failed to service on a regular basis. We provided all the service records showing that we had. Still, Toyota and the extended warranty company refused to honor the warranty. Moral of the story? Don’t buy an extended warranty and DON’T do business with Toyota!

    • Doobie

      I had a similar experience with my 2002 Camry. Toyota refused to help when my valve guide seals were shot FOR THE SECOND TIME at 83k miles. They are terrible and I will NEVER buy another Toyota

    • C C

      This is an unbelievable ABUSE on behalf of Toyota. My engine melted for no reason , and no warning on my 08 Prius and TOYOTA is doing anthing possible to not be responsible. As you, they are saying I did not service the car on time, which I id and have th einvoices. Not to mention the safety issue of a car’s engine meltng on a freeway with NO WARNING, GAUGE, or anything on the dasboard..I say we start Class Action lawsuit…anyone?

    • jleddy

      morale of the story Toyota is one of the most respected brands on earth. and you think ford is good so you lose all credibilty.

      • jalexis

        What’s wrong with Ford?
        Can you really prove that a Toyota is better than a Ford? Forget all the propaganda…

  • Chris

    Don’t EVER buy an extended warranty, especially aftermarket warranties from a 3rd party company that did not build your car. They will only cover mechanical failures due to faulty workmanship or bad materials. If there is an ounce of rust on the failed part they will claim the failure was due to rust and will be considered excluded. I honestly don’t know why you would ever need to use the warranty, short of the car exploding, in which you’ll be dead anyway. And even if you do use the warranty, there is probably a deductible too, so you spend even more.

    I bought what was advertised to me as a 100,000 mile warranty, yet I soon found out there was a laundry list of items in my contract that are only covered up to 50,000 miles. I bought the car with 36,000 miles so it definitely wasn’t worth it.

    I don’t know how the people at these warranty companies sleep at night. They are basically robbing you. Don’t ever buy their warranties. They should be out of business as far as I’m concerned.

    • Sarah Zhu

      I’m glad that I bought an extended warranty for my 2007 Honda odyssey. It was from aftermarket warranty company but they covered all the cost and I only paid $100 deductible for $1,600 repair bill. I think it’s really case by case. I would recommend anyone to buy warranties.

    • jleddy10

      this is the dumbest comment yet.

  • Shannon

    I bought a supposedly reliable used honda accord with low miles. At 40000 miles the transmission went out. The original warranty expired and I didn’t purchase extended one. Honda ended up paying half the bill, leaving me with 1500 to pay out of pocket. I traded the car in not long after. I recently bought a 2011 chevy cruze brand new. After 25000 mi the fuel pump went out and left me stranded. The repair was covered under factory warranty. I did purchase the extended warranty on this car. Kinda glad I did bc im already having problems. Ive had my cars serviced on time and I don’t abuse them. Also on my cruze the rotors had to be turned and that was covered but the brake pads were still good. My point is that you never know really what you re getting. It seems that cars aren’t made well these days.

  • Erica

    If the an auto company is willing to sell you the warranty for a certain price its a pretty good bet that the average cost of repairs for that vehicle is below that price otherwise they wouldn’t make any money. So while you may get unlucky every once in awhile, if you never buy an extended warranty and always buy reliable cars over your lifetime you are bound to come out ahead on average

  • tabby_leg

    I have a Honda van 2003, and i purchased the extended warranty for it when i purchased it. Later it turns out that the warranty company went out of business (bankrupt). I had to drive 50 miles back to the dealership to get my warranty covered by the dealership. they were willing to make the repairs and get paid back after bankrupty. nobody would take the extended warranty plan.

    The warranty turned out good for me. it cost $1500 but, i had around 8,000 worth of repairs after the factory warranty ran out. For me it was worth it. But, it was a hassle taking it back to the dealer to fix. A 100 round trip each time, that is if they don’t need it over night.

  • Noemi

    After leaving the dealership with my new car I realized that the extended warranty wasn’t free, can I go back to cancel it?

    • kim

      Yes, you can go back and receive the prorated amount you haven’t used, yet.

  • Sarah Zhu

    I bought a aftermarket warranty at the dealership where I purchased my 2007 Honda odyssey. At that time, everyone was telling me not to buy it because Honda is a reliable car, but since the finance lady were able to spread the warranty cost into my monthly payment,,,,,I think I paid extra $40 a month. I then decided to gave a try. My experience with warranty company was great! my car started having problems. breaks, sliding door, steering wheel ect….. right after the manufacture warranty expired. If I didn’t had warranty, I think I would’ve spend more than $5,000 on my repair. I’m so happy with my decision, so if anyone here is considering getting a warranty, I strongly recommended because the new car nowadays are just not so reliable.

  • Jim Kener

    One major thing you should think about is can you afford to pay for a major repair after the original coverage if the answer is no you probably should get the coverage and not roll the dice.
    If you are going to keep the car for 100,000 miles their is a fair chance something bad may happen.
    That being said I did have a car that did not need service until 170,000 (fuel pump) and 174,000 (water pump). At this point I dumped the car as it started to it was obvious more things would be coming.
    However the cars today have much more electronics in them than 16 years ago and going under the dashboard to fix something can run $1600 which pays for the coverage. According to my mechanic and two tow drivers I spoke to the most common problem with the new cars are the electronics and it is very expensive to repair. So while I did not purchase one in the past I have now.

    • scarhill

      So, you spent a lot of money to protect against something that most likely will not happen.

      An extended service contract is insurance, very expensive insurance, against a possible future event. An event which is, according to the experts, unlikely to happen.

      An extended service contract, they are not warranties, is only a sure bet for the dealer and the provider of the service contract. The one thing for sure is the service contract provider and the dealer will earn a profit on these contracts.

      Consider how these service contracts are priced.

      First, the provider of the contract employs experts who analyze how much the provider will have to pay out on average. This could be around $700.

      Second, the provider then adds a profit to this amount. This is probably $500.

      Third, the provider sells the contract to the dealer for $1,200.

      Fourth, the dealer adds a layer of profit plus a layer of profit for the F&I sales person. This can easily be $1,200.

      Fifth, the dealer sells the contract to the buyer for $2,400.

      So, the buyer has paid up to $2,400 for something the experts know will provide savings of around $700.

      While an extended service contract may provide a sense of protection against an unlikely event, the cost of this assurance is very excessive.

      Instead of paying $2,000 or so for the service contract, put the money aside in an interest bearing account. Should an unexpected event happen the money is available. However, if no event happens you, the buyer, has the money and not the dealer.

      There are reasons all major consumer advocates advise against these extended service contracts. Sure cost is the main reason. But the reliability of new cars makes such a contract unwise. In addition, manufacturers already provide warranties for 3 or more years. So, when you buy a 5 year extended service contract you are only gaining coverage for 2 years or less.

      • Jim Kener

        Taking a warranty is like taking out insurance on your home or car sometimes it pays off but sometimes it does not. You have to consider many thinks most of the time for most times it does not pay to get a warranty because repairs on the time are cheap or you can afford to replace it. If you purchase a $2500 T.V. is it worth paying $100 for a 3 year warranty, that’s a hard call I did and 2 out of 3 times it has paid off. As for a car paying $1400 for a warranty to protect you against repairs for 10 years or 100,000 miles seems to be reasonable because the cost of one major repair to the electronics could easily exceed the cost of the warranty. Both mechanics and tow drivers I spoke to stated that the newer cars that are out of warranty are the ones they work on the most, are the most expensive to repair and most repairs involve the electronics. Just removing the dashboard could cost over the cost of the warranty that I paid. Alas like everything else it is a gamble if you can afford to fix major repairs at anytime maybe you want to take the gamble but if you don’t have the money to possibly cover expensive repairs in the future a warranty can make sense.

        • scarhill

          You will not get a good extended service contract, they are not a warranty, for ten years for $1,400.

          Only the manufacturer issues a warranty.

          Regardless of what you pay for an extended service contract, the provider of that contract knows the average payout will be much less than what you paid. This can be because of the frequency of actual repairs or it may be due to the small print limiting the number of covered repairs. Regardless, for the majority of people, the cost of the service contract will be much more than the payout.

          While you may derive some assurance from an extended service contract, in the majority of cases you paid too much.

          This is not complex, it is simple math. Companies do not stay in business paying out more than they take in.

          Of course cars out of warranty are the cars mechanics work on. That is logical as older card require more maintenance. The real thing is how many of those repairs are actually covered by the extended service contract?

          In all cases, the extended service contracts are written to minimize the payout. That small print thing.

          But, if spending money for an extended service contract makes you feel good so be it. That does not change the fact for most people an extended service contract is s bad way to spend money.

        • Jim Kener

          1. I purchased a manufacturers extended warranty.
          2. The original cost was $2400 I negotiated it down to $1400.
          3. The warranty covers everything but maintenance and wear and tear items for a period of 10 years or 100,000 miles whatever comes first. The deductible is $50 which is paid once per incident.
          4. You are correct in that all insurance companies gamble on the fact you will not exceed the premium however if you do not have the money for expensive repairs it the future like all insurance it can be a good gamble.

        • scarhill

          But, what are the “wear and tear” items? You know, the small print.

          What is the definition of “per incident?” Typically, an incident is a part. So if there are three covered parts which are bad, the deductible is $150. The small print.

          If the $1,400 you spent on the extended service contract (not warranty) brings you peace of mind, that is money well spent. For you. In the end it is only $1,400.

          You did make the wise decision to buy the manufacturer’s extended service contract. Those do have some value. Third party contracts are dubious at best and often fraudulent.

          But the fact is, for most people, an extended service contract is a bad expenditure of money. This is why consumer advocates almost always advice against these warranties.

          Personally, I would prefer to put the $1,400 in a savings account. That way I, and not the dealer, have the money.

          Should I need a repair which is covered by an extended service contract, I have money to pay.

          On the other hand, if I have a repair not covered by an extended service contract, I also have the money. The person with the extended service contract has to come up with the money.

          And, should I never have a repair I, again, have the money.

          The fact that auto dealer F&I people have considerable training in how to persuade buyers into buying an extended service contract says about everything a buyer needs to know.

          Those F&I people are provided various word tracks designed to sell, provided props designed to sell. They are trained how to evoke a buyers natural fear of the unknown during the time the buyer is in the mood to say yes. Why do dealers pay for such training? Because the often make more profit off these products than they do on the sale of the car.

          Look it up. There are many, many web sites which explain the F&I process.

        • Jim Kener

          In my case per incident means any parts or labor needed to fix the problem when I bring in the car. If the car is not fixed I do not pay again so if they make an error it is their problem. However, you are correct each company has different contracts and you should always read the fine print. Most of the time you can cancel within 3 days but again you need to read the contract before you sign. The contract will tell you what is covered and not covered sometimes an extended contract will even cover things a manufacturers original warranty will like CV boots but exclude things like catalyst converter. If the problem is in the electronics you probably will make up your money the first time you use the warranty.

        • Jim Kener

          The “wear and tear” items are spelled out in the contract. They include tires, belts, fluids, shock absorbers and other similar items. I don’t know about all the states but in CA if it is not listed as excluded it is covered under the merchantability act.