Extended car warranties are offered by dealerships and many third-party providers. But are extended car warranties worth it? This is something to consider before buying a new or used car, because a dealership is almost certain to offer you a contract at time of purchase.

Extended warranties can be expensive, but they help you avoid unexpected repair costs, provide peace of mind, and motivate you to keep your vehicle regularly serviced. The answer to the question of whether extended car warranties are worth it depends on your vehicle and your budget.

This article will review the basics of extended car warranties. To go ahead and find out how much you would pay for coverage, get free quotes from some of the best extended car warranty companies in the industry.

Best Extended Warranty Companies
AutoGuide reviewed the top car warranty companies to find the best.
Below are our top 3 picks.
Best Coverage Best Service Best Value
Endurance CARCHEX CarShield
★★★★★ ★★★★★ ★★★★1/2
Get Quote Get Quote Get Quote
(877) 374-1840 (866) 254-0205 (800) 563-2761

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What Does an Extended Warranty Cover?

Extended warranty coverage varies from provider to provider. Companies typically offer several levels of coverage, with some of the most common being bumper-to-bumper and powertrain warranties. Your extended warranty may cover hundreds of components or just the engine, transmission, and drivetrain.

A bumper-to-bumper warranty covers almost all of the car’s parts between the bumpers. These types of warranties typically exclude items like glass and tires. A powertrain warranty covers everything that makes the car move. This includes the engine and drivetrain components.

To learn what a particular warranty covers, read the details of any contract carefully. The contract will either be inclusive or exclusive. Inclusive contracts specifically describe every covered component. Exclusive contracts cover everything except a group of specifically listed components.

Exclusions

Most warranties are intended to protect buyers against manufacturer defects and installation errors. Extended warranties are intended to replace components that wear down from normal use. Warranties do not cover damages that result from theft, collisions, or acts of nature.

Most warranty contracts stipulate that using your vehicle in ways that aren’t intended by the manufacturer void the warranty. Another common stipulation is that you can’t use your vehicle for commercial purposes, like as an Uber or delivery service. Finally, warranties always dictate that your vehicle is regularly serviced at your own expense.

How Much Do Extended Warranties Cost?

The annual cost of an extended car warranty can be anywhere from $500 to $1,000 or higher. Prices depend on the make, model, and age of your vehicle, as well as the contract term limits. Contracts can range anywhere from a few thousand miles to 250,000 miles.

The chart below compares bumper-to-bumper extended warranty quotes from a few popular warranty providers for a 2017 Ford Explorer with 45,000 miles.

Extended Car Warranty Provider Contract Term Monthly Cost Down Payment Deductible
Endurance 3 years/80,000 miles $166.88 for 18 months $178.10 $100.00
CARCHEX 5 years/100,000 miles $202.89 for 18 months First payment $100.00
CarShield Unlimited $129.99 monthly First payment $100.00
Protect My Car 4 years/100,000 miles $96.00 for 48 months $99.00 $100.00

When deciding whether an extended car warranty is worth it, remember that most warranty contracts come with a 30-day money-back guarantee.

Average Car Maintenance Costs

Repair costs can differ greatly depending on your vehicle. Some vehicles rarely require repairs, but when they do, repairs are expensive. Other vehicles need frequent but inexpensive repairs. The most reliable vehicles rarely need repairs and almost never need expensive repairs.

If you have owned your vehicle for a long time, you may already have an idea about its reliability. If you are trying to buy a new vehicle, do research about the most common repairs and typical repair costs.

According to RepairPal, the average annual repair cost for a Ford Explorer is $732. If you pay $900 a year for your extended warranty but only pay $700 in repair costs, then the warranty probably isn’t worth it. It would be better to save your monthly payments yourself unless you are worried about a sudden, expensive repair that clocks in at more than the average annual cost.

Paying $350 for a warranty on a car that costs $700 a year to maintain would likely save you money. However, be sure to check your warranty’s coverage and exclusions. If the repairs you need aren’t covered by your warranty, then there is no reason to have one.

Some people think that it is worth having an extended car warranty even if the annual fees exceed what they would otherwise pay for repairs. Because extended warranty contracts require that you regularly service your vehicle, they provide an incentive to keep your vehicle in tip-top shape. Additionally, many people appreciate knowing that someone else will handle an expensive repair bill should one arise, so an extended car warranty is worth it by providing peace of mind.

Dealer vs. Third-Party Extended Warranties

Extended warranties are offered both by the manufacturer and by third-party providers. In most cases, the manufacturer warranty will get you original equipment manufacturer (OEM) parts but also be more expensive. The major drawback of a manufacturer warranty is that they usually must be purchased when you buy your vehicle. This means the cost of your extended warranty could be rolled into your loan, and you would have to pay interest on it.

Most extended warranties are transferable. Even if you don’t use it yourself, an extended auto warranty could increase the sale value of your vehicle.

We think it is usually better to wait until the manufacturer’s original warranty is about to expire before purchasing an extended warranty. At that time, you’ll have more information to weigh your decision.

Are Extended Car Warranties Worth It?

Extended car warranties are worth it for many drivers who prefer to make small monthly payments instead of paying for expensive repairs out of pocket. Even if you don’t use your extended car warranty, the peace of mind that comes with having one can be worth it.

If you are thinking about an extended warranty, compare the average annual repair cost of your vehicle with the price of a warranty.

Top Recommendations for Extended Car Warranties

If you’ve decided that an extended car warranty is worth it for you, the first thing you should do is compare quotes from multiple providers. Here are two of our top recommendations, based on extensive research into coverage, cost, customer service, and the claims process.

Endurance: Best Coverage

We give the Endurance extended warranty top marks in coverage, because it offers some of the longest terms. Most extended warranties top out at 5 years or 75,000 miles. Endurance offers extended warranties that last as long as 8 years or 200,000+ miles.

Endurance has high-quality customer service and an “Excellent” rating on Trustpilot. Customers report convenient claims servicing, and we like that Endurance is a direct provider, meaning there is no middleman during the claims process. When you purchase an Endurance auto warranty, you also get a one-year membership to Endurance Elite, which includes perks like roadside assistance and tire replacements.

★★★★★
Endurance is our pick for best direct provider with its comprehensive coverage options.

CARCHEX: Best Service

We rate CARCHEX at 4.8 stars out of 5.0. Operating for 22 years, CARCHEX is one of the more experienced extended warranty providers. It is accredited by the Better Business Bureau, where it currently holds an A+ rating.

CARCHEX offers service contracts that go as high as 10 years or 250,000 miles. It has a range of coverage levels, all of which include roadside assistance, towing, rental car reimbursement, and trip interruption insurance.

★★★★★
Our research found this provider to have the best service.