What Does Extended Warranty Cover on a Car?

Shopping for cars at a dealership can be a hassle. You can often be made to feel as if you’re being pressured into buying products you don’t want. A more expensive car. A premium sound package. An extended warranty.

In this guide, we’re going to talk about one of those optional add-ons: the extended warranty. What does an extended warranty cover on a car, and should you purchase one? Let’s look at what this coverage entails and whether it’s an option you should consider.

What is an Extended Car Warranty?

Most new cars come with a manufacturer’s warranty. That’s a bumper-to-bumper guarantee that nothing will go wrong with your vehicle, from the drive axles to the sound system, for the first three years or 36,000 miles. Should you experience trouble, the automaker will partially or fully cover repair costs.

Beyond that initial term, however, you may find that you still want the confidence that comes with knowing that major repair costs will be covered. An extended warranty can offer you this assurance. Extended warranties are typically valid for about five years or up to 60,000 miles. However, you may find plans that will cover you for up to seven or eight years.

Extended warranties are available through your car dealership and through third-party providers. In the event that you purchase your warranty through your dealer, you may be eligible for discounts or to bundle your warranty in with your vehicle financing.

What Does an Extended Warranty Cover on a Car?

The coverage of your extended warranty will vary with the provider. Some warranties will cover just the basics like your engine, transmission, and electrical system. Others will offer bumper-to-bumper coverage that’s comparable to the original service contract.

In all cases, an extended warranty is similar to an insurance policy on your vehicle. In the event that something covered under your contract breaks, all or a large portion of the repair costs are covered. To put it another way, you pay a small amount each month or annually to protect you against pricey repairs down the road.

No matter from which company you purchase your extended warranty, it will generally cover:

  • Transmission
  • Steering
  • Electrical components
  • Suspension
  • Axles
  • Safety features such as airbags
  • Some emissions components

More comprehensive warranties may cover more intricate systems in your vehicle, such as your navigation, air conditioning, and sound system.

As you shop around for your extended warranty, be sure to fully read the service contract to ensure that you’ll be covered for the parts you feel are most important.

How Much Does an Extended Auto Warranty Cost?

Again, the cost of your extended warranty will depend upon where you purchase it. Upfront costs are generally between $1,000 and $3,000. If you’re purchasing the extended warranty at the time you purchase your vehicle, you can usually roll the cost of the contract into your loan. Remember, though, you’ll be responsible for interest on top of the warranty cost.

If you’re purchasing a warranty from a third party, you may have the option of paying monthly, much like insurance. Not all warranty providers will ask that you pay for the entire cost upfront. As with any purchase, be sure you shop around to get the best deal based on your driving habits and your budget.

In addition to the upfront or monthly cost of your extended car warranty, consider whether you’ll be required to pay a deductible. Some warranty issuers ask that you pay as much as $100 for services when your car is in need of repair. This may be lessened or waived if you bring your car to a dealership.

Other factors that may impact the cost of your extended warranty include:

  • The age of your car
  • The mileage on your vehicle
  • The make and model and perceived cost of repairs
  • The deductible you choose, if you are given the option

Explore all your options to ensure you get a good value. And remember to weigh the cost of your warranty against the benefit you think you’ll receive-extended warranties aren’t for everyone!

Conclusion: Cost of an Extended Auto Warranty

When you purchase a car at a dealership, you’ll likely be offered the option to purchase an extended warranty for your car. Before you make your final decision, ask your sales representative, “what does the extended warranty cover on my car?” Then, determine whether an extended service contract is right for you.