Extended car warranties provide peace of mind knowing that major repairs on your vehicle will be covered after the manufacturer’s warranty expires.
You may even be able to take advantage of benefits beyond what you’re used to with the original auto warranty, like rental car service when your car is with the mechanic.
The average new car is financed for 72 months—that’s six years! It can be stressful to think about major repairs when you’re still making car payments on an aging car.
You may find that adding an extended car warranty to your monthly budget is much less taxing on your wallet than having to fix your car.
Top Extended Car Warranty Companies
We found two companies that sell directly to customers, service their own vehicle service contracts, and are backed by insurance. Our top choice is a company called Endurance. Our second choice is EasyCare.
Keep reading to learn about a few key differences between the two. We’ll also teach you how to evaluate extended warranties through your car dealership in case you want some more options.
It doesn’t matter whether you have a new or used car, it can qualify for an extended car warranty through Endurance. Depending on the exact age and mileage, it could even potentially qualify for the Supreme Coverage plan.
If your car is older or has higher mileage, you still have three other choices that it could qualify for. You just need to review each one and what the warranty covers to ensure it works for your vehicle.
Whether you’re purchasing a new or pre-owned vehicle, it can qualify for an extended car warranty through EasyCare. And there are many other pros to consider with this provider. For one, the company has been around for over 30 years, so longevity is definitely there.
In addition to traditional vehicle coverage, EasyCare also offers plans for RVs, ride-share vehicles (which most extended warranty companies specifically exclude), commercial vehicles, and even leased vehicles.
What is an extended car warranty?
An extended warranty is a type of auto repair contract which covers the cost of major repairs to your vehicle. Also known as aftermarket car warranties, they are designed to provide coverage for certain repairs once the manufacturer’s warranty expires. However, in reality these can sometimes overlap.
By purchasing an extended warranty coverage, you can potentially save money in comparison to paying out of pocket for major repairs down the line.
In addition to repair coverage, the best extended car warranty companies also offer additional benefits such as rental car coverage, and roadside assistance. Extended car warranties can be purchased either from third party car warranty companies or direct from the manufacturer.
How do extended warranties work?
An extended car warranty works by providing you repair coverage in the event of a breakdown due to regular vehicle use. This usually covers mechanical repairs and electrical repairs.
The exact coverage will depend on the contract you agree to. Extended warranty companies will sell either exclusionary or named-component plans, with the latter including greater coverage of listed parts.
The best extended car warranty companies can offer competitive rates for comprehensive coverage. They also allow you to finance your extended warranty into affordable monthly payments.
What’s covered under an extended warranty?
While extended warranties can vary, most will offer coverage for major repairs and breakdown replacements. Typically, this will include coverage for your car’s powertrain, engine, and transmission, as well as electrical and air conditioning systems.
Remember, extended warranties cover breakdowns and subsequent repairs, unlike regular car insurance, which covers damage from collisions or road accidents. Warranties don’t cover things like vandalism, theft, or environmental damage. By definition warranty coverage applies to breakdowns that occur from normal use of your vehicle.
An extended warranty will not provide cover for what are considered routine, expected repairs, such as oil changes, brake pads and tires. Even the best extended car warranties will typically exclude these routine repairs. However, you will find plenty of options for comprehensive coverage if that’s something you want to budget for.
How to Choose an Extended Car Warranty
When looking at various extended car warranty plans, there are a few basic steps to follow during the review process.
1. Pick a plan to suit your needs.
The first order of business is to find extended warranty coverage that works for your existing vehicle. Most comprehensive plans will only be available for new cars with low mileage. Attempt to find a balance between budget and what you think you’re going to need.
Obviously, the major (and most expensive) parts of your car should be covered. But what about any technology in your car?
Things like GPS and Bluetooth are fairly well known for malfunctioning and those repairs can quickly add up. You should avoid overspending on your auto warranty. However, you also don’t want to skimp out when it comes to certain add-ons.
Take a look at your specific vehicle and first find the plans you qualify for. Then compare the cost to the allowable repairs. Oftentimes, you may be surprised to see just how easy the right choice is.
2. Make sure you understand your policy.
Your policy may be several pages long and read like incomprehensible legal jargon. However, you should still look at it closely from cover to cover. Inside, you’ll find all the details of what’s covered with your auto warranty and what isn’t.
If you’re having trouble understanding some of the finer points, don’t be afraid to call their customer service line and ask for clarification. They’re trying to win your business, so you can be specific and spend a lot of time on the phone if you need to.
3. Find out what your responsibilities are.
Your extended warranty won’t stay valid if you don’t take care of your car. Routine maintenance is typically your responsibility. So, you definitely need to keep up with your oil changes and tire rotation. If not, your warranty provider probably won’t pay for repairs if you haven’t held up your end of the bargain.
This is a big part of understanding your policy. Make sure you know what your responsibilities actually are so you don’t accidentally nullify your vehicle service contract.
Then, make calendar appointments to help you remember when you need to perform the necessary maintenance on your vehicle. If an emergency repair does pop up, you’re all set for an easy claims process with your provider.
4. Review the exemptions.
Even the most comprehensive extended car warranty is bound to have some type of exemption. Review this list before you commit to a vehicle service contract because these are the things that you’ll have full responsibility for repairing.
The older your car is, the longer this list will be. It’s good to know ahead of time so you can financially prepare in case one of the exemptions breaks.
If your car is newer, you may decide to pay for a more expensive plan to receive more coverage on your vehicle. On the other hand, you may decide not to go for the biggest plan since your car may be less likely to break down the newer it is. Do some research and use your best judgment.
5. Check if your mechanic is in-network.
Another consideration to make when shopping for extended warranties is how you can select a mechanic. At the very least, you can probably take it directly to the dealership for repairs and still have your claim covered.
However, if you prefer a specific mechanic, make sure they’re qualified under your plan. Oftentimes, extended warranties have some type of network that a mechanic must be in. For example, they might need a certain certification.
Depending on how important staying with the same mechanic is to you, it might be worth shopping around. Otherwise, just review the locations of in-network mechanics to confirm there’s one near you.
What to Avoid
When it comes to selecting a provider for your extended car warranty, there are quite a few red flags to look out for. In fact, it’s hard to come up with a recommendation list with 15 options because there just aren’t that many that meet a few basic, but important, criteria.
You certainly can buy a warrant through the dealership. However, this is invariably going to result in an upcharge because you’re basically dealing with a middleman. If possible, shop around for a direct provider that sells straight to the customer. That way you know exactly who you’re dealing with.
Dealing with a Middleman
Another red flag to watch out for is a company that doesn’t actually administer its own plan. Like a car dealership, there are also extended warranty brokers that just focus on the selling of the plan.
Again, you’re dealing with a middleman. Should you ever need to file a claim, it’s likely to get complicated as you’re dealing with two separate companies to get the repairs completed and paid for.
Backed by an Insurance Company
Finally, avoid selecting a warranty company that isn’t backed by an insurer. Unfortunately, there are countless cases of car warranty companies going out of business. This leaves their customers without their premiums and no remaining coverage on their vehicles.
When your car warranty is backed by a car insurance company, on the other hand, you have a way to confirm your claims are paid. Plus, auto insurance companies are regulated by the Federal Trade Commission.
What does that mean for your extended car warranty?
The most important thing is that an auto insurance company is required to hold enough assets to pay off all their claims. Additionally, you can better trust the fee you’re paying because car insurance companies are required to base them on realistic claim expectations, not inflated estimates.
Make sure your extended warranty company has the longevity to actually be there when you need them. That’s probably not going to be in the first week of your vehicle service contract. Instead, it could be a few years down the road when you’ve already paid months and months of premiums.
Choose wisely right at the beginning to avoid a costly mistake in the future.
Purchasing an Extended Car Warranty from the Dealership
There are a few things car owners should be aware of when purchasing a warranty from a dealership. Don’t worry, they’re not all bad, but need to be considered before you go in to negotiate.
First, know that if you prefer, you can get an extended warranty and simply roll it into the price of your car loan. You’ll add a small amount to your monthly payment (and pay interest on it), but it could be a lot less than if you go directly with a car warranty company.
Your best bet is to gather those estimates from external vendors in advance. When you go in to buy a car, you’ll be ready to know whether the dealer’s offer is a fair one.
Negotiating with the Car Dealer
That leads us to another point: the fine art of negotiation. Whatever price you’re given at the dealership for an extended warranty likely isn’t the best price they can offer. You can use your initial research from other extended car warranty providers to get a better deal than their first offer.
Just like most add-on products at the dealership, the extended warranty is also negotiable. Don’t be afraid and remember that you’re not obligated to do anything. When in doubt, walk away and think over the offer on your own time and then come back with your decision.
When you do negotiate your car and warranty at the dealership, make sure you look at the full cost of the loan. To meet your requirements for monthly payment amount, they may lengthen your loan term or increase your down payment amount.
Walk Away If You Have To
Stay in control of the situation by continually asking questions and carefully reviewing all paperwork. Remember before you sign, it’s not too late to walk away if you don’t like the final numbers that are on that contract. Don’t let anyone rush you. It’s too big of a purchase to be bullied into signing.
Try not to rush the decision process, regardless of where you choose to purchase an extended car warranty from. Take the time to research your options. Review vehicle service contracts before signing, and check that you’re working with a company that has the longevity you need to actually take advantage of their services.
How much do extended car warranties typically cost?
Extended car warranties are not cheap, and usually range from around $1500 up to $4000 in total. Prices will vary widely depending on the warranty coverage options you chose, as well as the age and build quality of your vehicle.
Having said that, most extended warranty companies do offer monthly payments, with many landing at around $100 per month. This can help make an extended auto warranty coverage an affordable option. The best extended car warranty companies will be willing to work with you and your budget to find a workable solution, especially if you’re going for bumper to bumper coverage.
Are extended car warranties a good investment?
While purchasing an extended car warranty is a smart choice for many car owners, it isn’t the right choice for everyone. But eventually, every vehicle owner will have to find an answer to this question. The simple answer is, it depends.
If you’re the first owner of a new car, chances are you won’t be too worried about covered repairs beyond your manufacturer’s warranty. It typically lasts between three and five years. If you plan to own your car longer than the manufacturer’s warranty, and you don’t have savings to cover significant auto repair costs, an extended car warranty is worth considering.
You’ve also got to take into account the cost and likelihood of certain vehicle repairs, especially in relation to the mileage, make and model of your vehicle. Car repairs typically cost around $400 on average, but some repairs can very quickly become expensive if we don’t have coverage.
Repair costs for a transmission, for example, can range from $1000 to $4000 on average. This is around the same range as the overall cost of most extended warranties, which would make your car warranty a good investment.
When is an extended car warranty worth it?
An extended warranty is a good option for drivers who want to establish a regular auto budget, or anyone driving an old vehicle. It’s also a good idea for anyone planning to keep their car long term and beyond the manufacturer’s warranty.
On the other hand, if you’ve got a reliable car with low mileage, or if you’re driving a car with a low total value, an extended warranty probably won’t be a great deal. Furthermore, extended warranty plans likely aren’t worth the investment if you’re still covered by your car’s manufacturer’s warranty, or if you have enough savings to cover unexpected large repairs.
Ultimately, deciding whether an extended car warranty is a sensible investment for you will involve comparing various quotes to find the best warranty provider for you. You can also check out extended car warranty reviews online to help you make your decision.
Benefits of Extended Car Warranty
Extended car warranty plans are beneficial primarily because the various systems in our vehicles can be vulnerable once the manufacturer’s warranty expires after several years. The best extended car warranties will essentially extend the factory warranty that comes with your vehicle. This includes comprehensive mechanical breakdown coverage, bumper to bumper protection, and other benefits.
Let’s take a closer look at the major benefits of investing in an extended car warranty:
- Peace of Mind: A good extended warranty will afford you both convenience and peace of mind, especially as the years pass. It can reduce the stress of breakdowns and repairs when you know that you don’t have to fork out a chunk of cash to get your vehicle back on the road.
- Higher Risk of Breakdown: With the ever-increasing volume of electronics in our cars today, they are inherently more susceptible to requiring electronic repairs. Many extended car warranty companies are forward-facing in this regard, with more focus on this kind of coverage.
- Budgeting: One of the most significant benefits of an extended warranty is the clarity it can provide around your auto expenses. Rather than needing to have an unspecified amount saved for a potential breakdown, you can factor in your monthly payments and avoid stressing about unexpected repair costs.
- Increased Value: The beauty of an extended warranty is that your plan, and your car, becomes more valuable with time. A car under extended warranty is more likely to be in good condition years later. An extended warranty can also potentially increase the value of a vehicle because it can be easily transferred to a new owner.