Are you looking for a way to protect your car, and your wallet, against costly repairs? You may have been offered an extended warranty for your car at the dealership, but maybe you aren’t sure if they’re worth it.
We rounded up all of the important things you should know about extended car warranties, including what they cover, how they work, and how to find the right one. Learn whether an extended warranty for cars is right for you. We’ve also sorted through some of the best extended car warranty companies to give you recommendations for comprehensive coverage.
Anytime you shop for coverage, we recommend comparing quotes from a few sources to find the best coverage and price. Use the tool below to start getting free quotes from our top three picks:
In this article:
- What Is An Extended Car Warranty?
- How Does An Extended Car Warranty Work?
- How Much Does An Extended Warranty Cost?
- Dealership Warranties Vs Third-Party Warranties
- Common Myths About Extended Warranties
- Who Has The Best Extended Car Warranty?
What Is An Extended Car Warranty?
An extended car warranty, also called a vehicle service contract, is designed to protect your vehicle from costly auto repairs. You generally make a small monthly payment toward your contract, and then pay a deductible if and when you need covered services from a mechanic.
It's important to note that an extended auto warranty is not the same thing as a manufacturer's warranty. In this regard, the name is somewhat misleading. An extended warranty is more accurately described as car repair insurance than a warranty.
How Does An Extended Car Warranty Work?
An extended warranty helps protect you by promising to pay for the cost of certain repairs should a mechanical or electrical component break down. Exactly which parts are covered depends on your specific contract. Typically, there are two types of coverage plan options: exclusionary coverage and named component coverage.
- Exclusionary coverage: This type of extended warranty covers all parts of your vehicle from mechanical breakdown due to normal driving activities, except for a short list of excluded parts and components.
- Named component coverage: This plan type is essentially the opposite of exclusionary coverage. Your contract will have a list of the parts and systems that are covered, and any unlisted parts are not covered.
Extended car warranties only cover components that break down as the result of normal use. Damage that is the result of an accident, misuse, or improper maintenance will not be covered. Certain items are not covered under any circumstance. These typically include non-mechanical parts like the bumpers, glass, trim, and upholstery. Wear and tear items such as tires, brake pads, wiper blades, and shock absorbers are also typically excluded from coverage as well.
After purchasing your contract, most providers require you to go through a waiting period until coverage can be used. This helps protect the warranty provider from someone purchasing a car warranty right after discovering an issue with their car. Most extended warranties require you to wait 30 days and 1,000 miles before you can make a claim for car repairs.
If you have a covered breakdown after your waiting period is up, you’ll file a claim with your warranty provider. Depending on your contract, you may have to use a dealership, or you might be able to use your favorite repair facility. Most plans require you to pay a deductible, and the extended warranty covers the rest of the repair cost.
How Much Does An Extended Warranty Cost?
The cost of any car extended warranty varies by provider. Generally, you can expect the cost to be based on the following factors:
- Amount of coverage
- Make and model of your car
- Age of your car
- Whether or not you have a luxury vehicle
With so many different factors, it’s hard to say what an extended warranty for cars might cost. You can pay upwards of $1,000 for a service contract from a dealership, while the same type of coverage from a third-party provider could be significantly less. The best way to find the right price on extended protection is to shop around and get multiple quotes customized for your vehicle.
Keep in mind that the cheapest option isn’t always the best choice. You’ll get the most out of an extended warranty if you find a plan that fit your budget, while providing the additional coverage and peace of mind you need.
Is An Extended Warranty Worth It?
An extended car warranty can be worth it for some drivers, but is a waste of money for others. The value of an extended warranty depends on your vehicle and your finances. Before making a decision, be sure to take the time to weigh the pros and cons of extended car warranties carefully.
In order to determine if an extended car warranty is right for you, first take the time to learn what an extended warranty is and what it is not. Only by learning exactly how extended car warranties work can you make the best choice. The information that follows can help you better understand extended car warranties.
Where To Buy An Extended Warranty
Finding a reputable warranty provider is the most important thing you can do when shopping for an extended warranty on a used car. To find a trustworthy provider that fits your needs, you’ll first need to decide between buying a warranty from a dealership or buying from a third-party warranty company.
Dealership Warranties Vs Third-Party Warranties
Dealerships usually offer a new vehicle extended warranty at the time of sale. If you’re buying a relatively low-mileage, used vehicle from a dealership, there’s a good chance you’ll be offered a warranty, too.
There are some important things to consider before you sign up for extended protection with the vehicle manufacturer.
- Repair shop limitations: Most dealership extended warranties require you to have covered repairs completed at a branded dealership. For example, a service contract from your Lexus dealership may require you to only visit a Lexus dealer for repairs. This means your preferred mechanic is not an option.
- Name brand parts: Manufacturer-branded service contracts almost always require repairs to be made with genuine manufacturer parts. Branded parts are usually more expensive than their generic counterparts. If you use a local repair shop for routine maintenance, it may have to use genuine parts in order to not void your extended warranty contract.
- Greater expense: Dealership service contracts are generally more expensive than third-party contracts. Your dealer may even suggest you roll the cost of the warranty into your car’s financing. This might sound convenient, but you will then be charged interest on the cost of your warranty.
Reputable third-party companies present a more flexible alternative for an extended car warranty. Unlike a dealership service contract, a vehicle warranty from a trustworthy third-party provider usually means:
- Choice of repair shop: Because they are not tied to a dealership, third-party warranty providers allow you to take your car to a network of local auto repair shops and national chains. As long as your favorite mechanic is certified by the National Institute for Automotive Service Excellence (ASE®), you should be able to go there for covered repairs.
- Lower costs: Without the dealership markup, third-party companies are able to provide much better pricing on your service contract. Many third-party providers are brokers, meaning they offer warranty plans from a variety of administrators and have competitive pricing. Additionally, you’ll be able to customize your coverage to walk away with a plan that fits your budget.
- No pressure: There’s no need to purchase your extended warranty on the day you buy your car. The dealership may require you to purchase your warranty when you buy your car. Other providers allow you to purchase a plan anytime.
- Coverage for older used cars: If you buy a used car with high mileage, you may not qualify for a dealership service agreement – even though you probably need it more for an aging vehicle than for a new car. A great third-party provider will offer plans for cars with upwards of 100,000 miles.
What To Look For In A Used Car Warranty Provider
In order to find the right warranty company, it’s important that you do your homework. Always consider these steps when shopping for a third-party warranty provider:
- Check the BBB rating: A high rating from the Better Business Bureau helps you understand how the company handles customer comments and complaints.
- Check online reviews: Look at reviews to make sure your potential warranty company is honoring contracts and taking care of customers. Oftentimes, you learn the most about a company by what customers have to say.
- Read the contract: The contract is the only legally-binding document that guarantees what is and isn’t covered under your plan terms. Always make sure to read the fine print when going through your contract. If you want to take a look at a contract without any commitments, check if the provider has sample contracts.
- Get a guarantee: Reputable extended car warranty companies often offer a money back guarantee if you decide the plan isn’t for you after all. Find out when you need to cancel in order to receive a full refund.
- Stay away from sales: This might seem backwards. After all, who doesn’t want to get a great deal? However, a third-party company that offers you a “today only” price is only trying to pressure you to make a decision. Look for a company that offers you its best price and gives you time to think it over before making a commitment.
Common Myths About Extended Warranties
There is a lot of misleading information out there when it comes to extended warranties. We break down some of the biggest myths below. The best way to find a reputable extended car warranty company is to understand just what an extended warranty is, and what it’s not.
|An extended car warranty is an extension of your manufacturer’s warranty.||A manufacturer’s warranty comes with new vehicles (and some used ones) and covers defective or faulty parts. Extended warranty service contracts are an additional purchase that can help pay for certain repairs after the manufacturer’s original warranty expires.|
|My car still has the manufacturer’s warranty, so it’s completely protected.||Most manufacturer warranties only last for a few years. Vehicles tend to experience more issues as they age, so by the time your car breaks down, your factory warranty could be expired.|
|An extended warranty pays for all repairs to my car.||While there are comprehensive, bumper-to-bumper plans available, no warranty will cover your car for every ding, dent, or breakdown. Your contract tells you what is and isn’t covered by your plan. Understanding your contract is vital to getting the most out of an extended warranty for cars.|
|An extended warranty is a scam that won’t pay for any repairs.||Unfortunately, fake warranty companies do exist to scam people out of money. But there are many reputable providers too. If you research your provider before making a commitment, you can avoid these scams and find a great vehicle protection plan.|
|Extended warranties are expensive.||While some extended warranties can be expensive, there are countless options for protecting your car. Try to find a warranty company that offers the coverage you want at a price that fits your budget.|
|You can’t get an extended warranty on a used car or one with high mileage.||Most warranty companies offer protection plans specifically for older or high-mileage vehicles. Drivers today are keeping their cars for longer than ever before, so it makes sense for a warranty provider to offer coverage for older vehicles.|
Who Has The Best Extended Car Warranty?
There are plenty of extended warranty companies to choose from, but working with a highly respected company can help you save money and headaches in the long run. In our recent review of the best third-party extended car warranty providers, we researched the top providers in the industry, looking at things like industry reputation, cost, customer reviews, and more.
|Third-Party Provider||Best For||Motor1 Rating||Coverage Levels||Years in Business|
|1. Endurance||Drivers looking plenty of coverage options |
and good customer service
|2. CARCHEX||Coverage of used cars with almost any age |
|3. Protect My Car||A variety of plans, including one for motorcycles and ATVs||4.3||3||16||Get Quote|
|4. CarShield||Drivers looking for long term lengths |
or month-to-month payments
Endurance: Best Coverage
Endurance is a direct provider of extended warranties, which means the company services the contracts it sells. If you need a covered auto repair, you’ll talk with the Endurance customer service team directly. Most other providers are brokers for service contracts, serving as the middleman between you and a warranty administrator.
Endurance provides its own contracts and offers five levels of coverage for drivers. Benefits to using Endurance include the ability to choose any licensed repair shop, claims paid directly to repair shops, and zero-interest monthly payment plans. It also offers one free year of the Endurance Elite Benefits, which includes roadside assistance, ID theft protection, and key fob replacement service if you lose or break your electronic key fob. Be sure to read our Endurance warranty review for more information.
CARCHEX: Best For Used Cars
One of the industry leaders in extended warranties for cars, CARCHEX provides plenty of coverage options to satisfy almost any car or budget. You’ll be able to choose from five levels of coverage, with various contracts within those levels. Every CARCHEX plan comes with extra perks like 24/7 roadside assistance, rental car reimbursement, and trip interruption services, too.
CARCHEX holds an A+ BBB rating and has been BBB accredited for a decade. The company has also been in business for over 20 years, so you don’t need to worry about it folding as soon as you need a repair. CARCHEX has numerous endorsements and partnerships with top automotive industry leaders like CARFAX, RepairPal, Edmunds.com, and Kelley Blue Book. Read our CARCHEX review for a more detailed explanation of coverage, benefits, and customer reviews.
Protect My Car: Best Maintenance Plans
Protect My Car offers several service agreements that are ideal for older or high-mileage vehicles. The company also has some of the longest term lengths available for extended warranties, ranging from 36 to 60 months.
The only speed bump we ran into with Protect My Car was the quotes process, which we found to be a little confusing. Most warranty providers have intuitive online quote forms, but Protect My Car makes it hard for you to get your quote.
CarShield: Best Value
Our choice for Best Value extended warranty provider is CarShield. Month-to-month contracts can be cancelled at any time, and there is a money back guarantee for contracts cancelled within the first 30 days. CarShield offers roadside assistance and other great benefits with most plans.
In addition to four versatile plans ranging from comprehensive to powertrain warranty coverage, CarShield has a plan designed specifically to protect high-tech components and a plan for specialty vehicles like motorcycles and ATVs.
Plus, CarShield is one of the most popular providers, having covered more than one million vehicles since opening its doors 16 years ago. Check out our CarShield review for more information.
In an effort to provide accurate and unbiased information to consumers, our expert review team collects data from dozens of extended auto warranty companies to formulate rankings of the best providers. Companies receive a score in each of the following categories, as well as an overall weighted score out of 5.0 stars.
- Industry Standing: Warranty providers with a history of strong business practices and endorsements from experts receive the highest scores in this category.
- Coverage: This rating is based on types of extended warranty plans available, coverage terms, and added benefits like roadside assistance.
- Cost: Our research team reviews sample quotes for a variety of plans and vehicles. Companies with lower prices per year of coverage receive the best scores.
- Transparency: This score takes into account contract transparency and the availability of a money-back guarantee.
- Customer Service: We comb through customer reviews and perform our own shopper analysis to get a sense of the responsiveness and helpfulness of each warranty company.
Read our guides to other warranty providers: