Should You Buy an Extended Warranty?

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It’s a question we hear often, “Should I get an extended warranty on my car?” The answer is entirely up to you. Extended warranties can save you money in the long run, but they also can be costly up front. Fully understanding your options is important in making your decision.

What exactly is an extended warranty?

They are an additional layer of insurance on your vehicle. Specifically, it’s insurance on the parts that make up your vehicle.

Who issues an extended warranty?

You have three options:

    • Your vehicle’s manufacturer

Most new cars come with some type of warranty included in the price of the vehicle. These warranties are usually limited to a specific area of the vehicle.

    • Your dealership

Extended warranties are an opportunity for dealerships to make extra money. Some dealerships automatically include a limited warranty with the purchase of a new car. For used cars, dealerships will sometimes offer a limited extended warranty for purchase. The benefit for buying an extended warranty from the dealership is that the cost of the warranty can be rolled up into your payment plan.

    • A third-party aftermarket company

Third-party companies will also offer extended warranties for both new and used vehicles.

What is covered?

There are two main types of warranties:

  • Powertrain or drivetrain warranties covers mechanical parts of the vehicle including parts of the engine, transmission, differential, and axles.
  • Bumper-to-bumper warranties cover all parts of the vehicle except for those that are affected by normal wear and tear like tires, brake pads, and wiper blades.

Other warranties can be purchased to cover things like rust, emissions, tires, and accessories.

Where can repairs be made?

Dealerships will strongly recommend you bring the car back to where you bought it for repairs. Legally, the Federal Trade Commission says that a dealer can not refuse to honor the warranty if you take your car somewhere else for repairs.

Whether or not you decide on purchasing an extended warranty, be sure to take your car to an ASE Certified shop for any repairs.