We’ve all been there. You decide to buy a (new) used car. When you go to finalize your purchase you get asked: “would you like an extended warranty plan for your car?” Now you need to decide whether to buy extended warranty for your new or used car!
The next question that comes to your mind: is it worth for me to get extended warranty on my new car? … or maybe used car?
Let’s start with the basics: What is extended car warranty?
Simply put, extended car warranties help cover the cost of covered repairs on your car during the period of coverage. There are a lot of different factors that play into this.
For instance, one month after you drive your car out of the dealer’s parking lot, the infamous check engine light comes on. The one light that does not tell you much, but makes you wonder how much the bill will be. If the repair shop discovers that the issue is covered under your car warranty, then, guess what? You can walk out paying just you deducible or likely $0 fo the repair.
What does extended car warranty cover?
This depends on the plan you select. As you can suspect, the more coverage you choose to get, the more you can expect to pay for the plan.
Each provider offers different coverages and plans. We provide a a high-level summary of what some of the providers cover in their extended car warranty packages. Depending on the provider you select, each car warranty plan covers different parts and services of your car.
Often times the warranty plans have several tiers. The lowest plan covers the basic issues to help keep your car running, and the the higher tiers cover additional parts, such as your navigation system, radio, or some other accessory.
Check out our review of extended car warranty plans.
How much does extended car warranty cost?
There are different factors that come into play in determining the cost of an extended car warranty plan. Based on research by Motor1, the average cost of extended car warranty is approximately $2,800.
Some of the key factors are:
- Age of your car
- Your car’s current mileage, and the expected number of miles you would like the extended warranty to protect you for
- Your car’s brand and model (this obviously plays a factor into the labor rates the provider will likely be paying for).
- The period of time you would like coverage for.
- Whether you choose to have a deductible for your warranty coverage. In other words, every time you need a repair and decide to rely on your warranty coverage to be used, you would pay an out-of-pocket deductible, similar to that on insurance coverages.
- The level of coverage you choose to purchase.
Types of coverages
In summary, often times you can group extended warranty coverages into three plans:
- Basic powertrain coverage.
- Powertrain “plus.”
- “Bumper-to-bumper” coverage.
Learn more about the types of warranty coverages.
Depending on where you purchase your car warranty from and the level and amount of coverage your choose, expect to pay anywhere between $1,500 and $4,500 (approximately) for your extended car warranty.
Should I buy extended car warranty and from where?
Your decision to purchase extended car warranty depends on many factors. All of the factors are correlated, you should assess them in context of one another.
One assessing the factors below, note that you just spent a lot of money to purchase a car, whether in cash or through financing, and do you want to spend more if something breaks down? Consider investing in your car, like any other investment you make.
To help guide your decision, here are some factors to consider:
- Are you buying new or used? If new, check out our post about manufacturer’s warranty on your new car before you decide.
- How will you be paying for the car warranty? If you roll the purchase of the warranty into your car, are you comfortable with the increased monthly payment?
- How long do you expect to keep your car?
- What is the value of your car?
- Do you have a mechanic in the family?
- Are you looking for convenience? In other words, if the check engine light turns on, you want to drop it off at a reputable shop and know they will take care of it for you. You don’t want to worry about expenses that you did not budget for!
- In the event your car breaks down within 6 months from your purchase, do you have cash to have your car fixed? Take a look at our in-depth post about how much a car repair may cost you!
Check out some extended car warranty options that may be a right fit for you.
You made a significant investment in purchasing your car. You should have a serious consideration on whether you should further invest in your car to make sure it runs and lasts a long time.
If you’re financing your car for at least 4 years (48 months), you expect the car to run during that time and beyond. Given the average cost of car repairs, you don’t want to continuously spend money fixing a car (you are already paying monthly for!) or made a significant cash outlay on.
Purchasing extended car warranty may not be for everyone, but it would surely solve and help protect you against unnecessary expenses.
David is an avid car enthusiast. Whether it is classic muscle cars or electric vehicles, David loves everything about cars. Over the years David has bought and sold many cars, as a consumer, and take an active interest in car repair. Outside of cars, David loves to regularly bike to stay active!