If you’ve made a trip to a car dealership lately, you’re probably familiar with the concept of extended car warranties. Your sales representative likely tried to sell you this type of service contract, and maybe you suffered a bit of sticker shock.
The quote you received from your car dealership may or may not be what most shoppers pay. In this guide, we’ll take a look at the average price of an extended car warranty so you can shop and purchase with confidence.
Do I Need an Extended Car Warranty?
Whether you’re buying a new or a used vehicle, the dealership you visit will offer you the option to add an extended warranty to your purchase. An extended warranty is a service contract that will help offset the cost of vehicle repairs after your manufacturer’s warranty expires.
Many people find that they do not need an extended vehicle warranty. This is particularly true for people who have purchased notoriously reliable vehicles. Toyotas, for example, rarely experience breakdowns and are reliably sound cars and trucks.
Other people find that an extended warranty offers the confidence they need as they add miles to a vehicle. As you know, mechanical issues become more and more likely with wear and tear on a car. An extended warranty can help keep your costs down should those issues arise.
Bear in mind that you don’t need to purchase a warranty on the day you buy your vehicle. You have time to shop around for warranties that make sense for your budget, your vehicle, and your driving habits.
Most importantly, don’t allow a sales representative to pressure you into making a purchase you don’t need. Your dealer is paid a commission on the warranty he sells you, so it’s in his best interest to convince you to sign for an extended service contract.
Whether you purchase an extended car warranty is ultimately up to you and your personal preference. However, it’s important to ensure that you’re not paying too much for your service contract, so let’s take a look at the average price of an extended car warranty.
Average Price of Extended Car Warranties
To put it simply, the average price of an extended car warranty is around $1,500. However, this is an average. Your warranty can cost as low as $1,000 or as much as $3,000. The service contract can be paid for upfront or can be rolled into your vehicle financing. Each of these options changes the cost of your warranty just a bit.
Should you choose to finance your extended warranty, the cost may seem negligible. After all, the monthly amount you’ll pay on your car note will only be higher by about fifty dollars or so. This makes the price of your warranty more manageable.
However, you’ll need to remember that you’re paying interest on your service contract. Be sure you calculate this when you decide whether an extended warranty is worth the money.
Paying for your vehicle’s extended warranty upfront may seem a bit daunting. Several thousand dollars is a lot of money to pay for repairs that may not be needed. Consider an alternative: would you benefit more from putting that money into an interest-bearing savings account? Having that money on hand for repairs would be helpful, and if you don’t need it, it’s literally money in the bank.
In summary, the average price of an extended car warranty will vary depending upon the coverage of your warranty and the provider you choose. Be sure to factor in all associated costs of your service contract before making your purchase.
Summary: Extended Car Warranty Cost
The price of an extended vehicle service contract can vary widely depending upon your provider, your vehicle, and the terms of your warranty. Be certain that you shop around for the best deal, and don’t allow anyone to pressure you into buying a service you don’t need.
Extended warranties aren’t for everyone, and only you can decide whether the average price of an extended warranty is worth it to you.