When you purchase a new car, your vehicle comes with a manufacturer’s warranty. This service contract protects you from pricey vehicle repairs in components like your transmission, engine, and electrical system.
But what happens when the warranty expires? They only last a few years, after all. Well, consumers have the option to purchase an extended warranty for their vehicle. In this guide, we’ll answer the question, “how much is an extended car warranty?” We’ll also look at what these warranties cover and whether you need to buy one.
What is an Extended Car Warranty?
An extended vehicle warranty protects you from expensive car repairs. When you first bought your car, you had the assurance that, should something go wrong, the dealership would fix your axles, steering system, suspension, and other mechanical parts.
That original warranty doesn’t last forever, though. Typically, you’ll be covered for three years or 36,000 miles, whichever comes first. After that, you’re on your own for vehicle repairs—at full price.
Unless, that is, you have an extended warranty. An extended car warranty is just that—it extends the terms of your warranty for several years. Some warranties will last until your vehicle is five years old or has 60,000 miles. Others may be longer, depending upon the issuer.
Your extended warranty may not be as comprehensive as your original manufacturer’s warranty, but most extended warranties will still cover the most expensive repairs. Whether you purchase an extended warranty will depend upon your driving habits, your budget and your confidence on the road.
What Does an Extended Car Warranty Cost?
Just as the terms of your extended car warranty will depend upon the issuer, so will the cost of your plan. On average, you can expect to pay around $1,500 for your warranty. However, the cost can vary greatly between one provider and the next—you may pay as little as $1,000 or as much as $3,000.
Before you purchase your warranty, be sure to shop around. Your dealer will likely offer you the option to purchase extended coverage, but you don’t need to jump on the offer the day you buy your car. The exception is if you’re planning to roll the cost of the warranty into your auto loan.
Should you finance your warranty, remember that you’ll be paying interest on the full price of your service contract. This will raise the monthly cost of your warranty just a bit. On the flip side, however, financing your coverage will certainly make the cost of your service more manageable.
If you don’t care about financing, you have until your manufacturer’s warranty expires to shop for and purchase an extended warranty. Check the prices of reputable warranty providers, and pay close attention to the services that are covered.
Pay attention to whether the warranty requires that you pay a deductible. In some cases, you may have to pay as much as $500 out of pocket for services that are “covered” by your warranty. If this is the case, evaluate carefully whether the warranty is worth it to you.
Do I Need an Extended Car Warranty?
Most people who have extended car warranties report that they don’t use the service nearly as frequently as they’d anticipated. If you have a reliable vehicle, this will likely be true for you, as well.
If, however, you’ve purchased a car that is notorious for breakdowns and mechanical failure, you may want to consider an extended warranty. You’ll likely find that you pay less out of pocket with this coverage; you’ll have fewer unexpected mechanic bills.
An extended warranty is only as good as the components it covers. Read the fine print very carefully before you pay thousands of your hard-earned dollars for a vehicle service contract. Are there deductibles? What repairs are covered? Are there specific garages you’ll need to use? Find this out before you pay for additional service coverage for your car.
Your driving habits will also determine whether you need an extended warranty on your car. Do you maintain your vehicle, keeping track of oil changes and tire rotations? Or are you a “set it and forget it” type of vehicle owner, only tending to your vehicle when something goes wrong?
Only you can decide whether an extended car warranty is right for you. Weigh your options, weigh the costs, and make the choice that makes the most sense to you.
Conclusion: Cost of Extended Car Warranties
How much is an extended car warranty? Well, that depends upon which provider you choose. Generally speaking, you can expect to pay around $1,500 for your service contract. Shop around and find the warranty product that best meets your needs.