Should I Buy an Extended Warranty for My Car?

When it comes to buying a car, you’ll be faced with many choices — make and model, add-on features, price — the list can go on and on. Once you find the perfect car, you’ll have additional decisions to make. If you purchase the car from a dealership, you’ll likely be asked if you want to buy an extended car warranty. You can also look for an independent provider. To help you decide whether or not to purchase the extended warranty, we answer common questions you may have.  

What Is an Extended Car Warranty?

An extended warranty for a car is a plan intended to help cover repair costs your vehicle may need when the manufacturer’s warranty ends. Generally, it begins once the manufacturer’s warranty has expired, but there may be overlap between the two plans.

Does an Extended Warranty Cover All Repairs?

No. While purchasing an extended warranty may sound like a good idea and is tempting, especially when you’re ready to finalize the sale paperwork, it’s important to understand exactly what the plan will cover if your vehicle should need repairs.

Generally, extended car warranties don’t cover routine maintenance like oil changes, new tires, brakes, etc. The extended warranty may not offer the same amount for parts that the manufacturer’s warranty had provided. Be sure to read the contract details carefully before purchasing the extended warranty to decide if it’s worth the cost.

How Much Does an Extended Warranty on a Car Cost?

Costs vary, but an extended car warranty can typically cost between $1,000 and $3,000. If you add this amount to a car loan, you’ll also be paying interest on that amount. The term of the warranty will also vary. Extended warranties may also include a deductible. Refer to the contract to find out if there’s a deductible and if there are any fees.

What Are the Main Reasons to Buy an Extended Warranty?

The main reason you would want to buy an extended warranty for your new or new-to-you car is to save money in the future on a covered repair. Without a manufacturer’s or extended warranty, you would be responsible for paying the entire bill out of pocket. An extended warranty may help pay for repair costs if the repair is covered under your contract.

Should I Buy an Extended Warranty on a New Car?

When you buy a new car, it comes with at least one warranty from the manufacturer and sometimes several other warranties that cover different things. Since an extended warranty provides coverage after the manufacturer warranty ends, it’s important to ask yourself some questions before you purchase the extended warranty:

• How long do you plan to keep the car? Most manufacturer warranties last around three years. If it’s likely you may be getting a different car in the near future (for example, if you’re starting a family and will need a bigger vehicle), you may not need the extended warranty.
• How much will you be driving? In addition to a time limit, manufacturer warranties also have mileage limits — usually 36,000 miles. If you know you’ll exceed the mileage limit quickly, you may benefit from the extended warranty.

Should I Buy an Extended Warranty on a Used Car?

Used cars don’t typically come with a warranty. And because used cars tend to be older and have higher mileage, it’s more likely that you’ll need to make repairs than if you were buying a new car.

For these reasons, it may make sense to purchase an extended warranty for a used car. However, if you have savings to cover any repairs you may need, a warranty may not be necessary. After all, if your car doesn’t need major repairs during the life of the warranty, that money will go unused.

What Are the Drawbacks to Purchasing an Extended Warranty?

While saving money is a major benefit to buying an extended warranty, if your vehicle doesn’t need repairs within the contract timeline, the amount you paid for the warranty goes unused. The warranty is really for costly repairs. Often, cars only need minor repairs that don’t add up to the price of the warranty. Instead, you could save the money you would have used for the extended warranty as a rainy-day fund for future minor repairs. And your extended warranty may not cover everything. Again, be sure to read the fine print of your contract to be sure you understand what it covers or doesn’t cover. There may also be limitations on where you can have your car fixed.

Coverage for the Unexpected

Whether or not you opt to purchase an extended warranty for your car, be sure you and your vehicle are properly covered. Connect with a Farm Bureau agent to get the auto coverage you need.