Can you negotiate an extended car warranty?

Extended car warranty basics

The first step to effectively negotiating a better deal on an extended car warranty is understanding what they are and how they work.

What is an extended car warranty?

An extended car warranty is a service contract that covers repairs for mechanical issues included in the agreement. Also known as vehicle protection plans, extended warranties are usually not included with the vehicle you buy and must be purchased separately — except in the case of some certified pre-owned cars.

What's the difference between a manufacturer’s warranty and a third-party extended warranty?

Here are a few things that distinguish the extended car warranties that you buy from third parties from the factory warranties that come with new cars:

What does an extended car warranty cover?

What systems and components are covered by an extended warranty vary by plan and provider. You can choose an extended car warranty plan from coverage options that typically fall into one of three coverage tiers:

• Bumper-to-bumper warranty: The highest level of coverage available from warranty providers is an exclusionary coverage plan. These plans cover every part of a vehicle from the front bumper to the back bumper, except those specifically named in the contract as exclusions.
• Powertrain warranty: The most basic plan you’ll find is an extended warranty that only covers the essential components that keep your vehicle running, such as the transmission, drive axle and engine.
• Stated component warranty: Most extended warranty providers offer at least one midlevel plan that covers parts like the air conditioning system, fuel system and starter, along with everything included in a powertrain plan.

Extended car warranty exclusions

No matter what level of plan you purchase, there are some things that an extended warranty will almost never cover, including:

• Wear-and-tear items like brake pads or windshield wipers
• Routine maintenance services, like oil changes and tire rotations
• Windshield glass
• Damage caused by improper use
• Mechanical failures caused by maintenance neglect
• Damage caused by aftermarket accessories
• Cosmetic damage
• Mechanical issues resulting from collisions or other sources of damage that would normally be covered by insurance
• Preexisting issues

How to prepare for negotiation

When you buy a vehicle protection plan at a dealership, the finance office staff are the ones who set the final price and terms. They’re also the people you’ll negotiate the cost of your warranty with.

Be prepared to speak with the finance office

You’ll want to negotiate the price of your warranty with the dealership’s finance office, since that’s who sets the final cost.

The more prepared you are for your negotiation, the better chance you’ll have of getting the best price the dealership can offer. There are a few things you should do before heading to the dealership.

1. Get extended car warranty quotes

A competing offer is one of the most powerful negotiating tools you can bring with you to the dealership. Getting quotes on a protection plan for the specific vehicle you want to buy will also help you in other ways. You’ll learn the average price range for extended warranties, find out what coverage plans are available and have options to turn to if you don’t get what you want at the dealership’s Finance and Insurance (F&I) office.

2. Determine average costs

You should know how much an extended warranty for your car should cost before talking to the F&I office. This allows you to know whether or not you’re getting a good price on the initial offer. Knowing the average price range also gives you an idea of how low the dealership may be able to go on the price.

Getting a few quotes for the specific car you want is the best way to find an average price range for coverage. Mileage is also a factor in extended warranty costs, so if you’re purchasing a used car, make sure to use the same mileage when you request a quote.

3. Set your price boundaries

When you negotiate anything, it’s important to know what you’re willing to accept. Based on your price research, set a limit for how much you’re willing to pay for an extended warranty at the dealership.

If they’re not willing to go below that limit and you have lower quotes from other providers, you can simply say no.

4. Know what coverage you want

People who work in F&I at car dealerships are trained to upsell. In an in-person negotiation, it can be difficult to say no to things you don’t need — especially if you’re not sure of what you do need before you walk through the door. You may find that a basic, cheap extended warranty plan is all you really want.

Take the time to look into different levels of coverage available to you and decide what you want while you’re at home, not at the dealership.

5. Research your finance options

You can roll the cost of an extended warranty into your vehicle financing. This is helpful if you can’t afford to pay for a coverage plan upfront. You can roll the cost of an extended warranty into your auto loan, but unless the loan has 0% APR, you’ll also pay interest on that amount.

Most third-party extended warranty providers offer monthly payment plans to resolve this issue without adding it to your auto loan. You also don’t have to get financing from the dealership. In many cases, you can find better options from a bank or credit union. Just like with a warranty plan, having a competing loan offer may also convince the F&I staff to match or beat that rate.

Strategies for negotiating an extended warranty

Not everyone is a natural negotiator. However, the savings you can get are likely worth the discomfort of a negotiating session. Here are a few tips:

1. Just ask for a better price

It’s worth just asking the dealership to lower the price of the extended car warranty as a first step. The salesperson may say no, but there’s also a reasonable chance they'll give you a discount just because you show them you’re prepared to negotiate.

2. Bring other offers

An offer from another provider can give you an edge in your negotiation. This shows the F&I department that you’ve done your research and know what an extended car warranty plan should cost. It also tells them you have another option for coverage if they’re not willing to work with you.

Print out other offers

Having written quotes from third-party providers gives you leverage and keeps the finance office from inflating prices.

3. Do the math, and show your work

Another strong negotiating tactic is to show the salesperson that you understand how the math works by breaking down the numbers in front of them. For example, you can point out that financing an extended warranty with the vehicle purchase will cost you a certain amount in interest fees and ask them to reduce the price of the plan by at least that much.

4. Ask to see your options

Dealerships often have several coverage levels but may only show you the priciest plan first. Be direct and ask what else is available. You can mention that a few of the other providers you looked into offered several plans.

5. Look for hidden fees before you sign

Service charges and other fees that can impact the price of your coverage may be buried in the fine print of an extended warranty contract. Don’t agree to a deal until you take the time to read your contract. Look for hidden fees or anything else that seems fishy.

6. Be willing to walk away

Ultimately, the best leverage you have is your ability to say no. Come to the negotiating table knowing the coverage and price you feel comfortable accepting, and be prepared to turn the salesperson down if they can’t offer that. This is much easier when you have quotes from other warranty providers already lined up.

Common pitfalls and how to avoid them

When negotiating an extended car warranty, knowing what not to do is just as important as knowing what to do. Mistakes can be costly, but most of them can be avoided.

Alternatives to dealership warranties

The dealership isn’t your only option for an extended car warranty. You can also purchase coverage from a third-party provider on your own.

What is a third-party extended warranty?

A third-party extended car warranty is a vehicle protection plan from a company other than your vehicle’s manufacturer. These companies offer coverage plans for purchase that compete with those offered at dealerships.

Benefits of third-party car warranties

There are some noteworthy upsides of aftermarket protection plans worth considering, including:

• Purchase anytime: In most cases, you can only purchase extended warranty coverage from the manufacturer before the factory warranty expires. You can purchase a third-party contract at almost any point.
• Use anywhere: Dealership warranties typically require all repairs to be done at the brand’s service departments. Third-party warranties can pay for repairs at most ASE-Certified service centers in the country, letting you choose who does your work.
• No added financing costs: You can usually pay for a third-party car warranty over monthly payments. This lets you spread out the cost instead of paying it all upfront, and you won’t be charged interest on the plan.
• More options: As warranty specialists, most aftermarket providers offer more plans to choose from than dealerships do. This gives you the ability to find a level of coverage that fits your needs.
• No pressure: Most third-party warranty providers allow you to purchase your coverage online or over the phone on your own time. As a result, you can take your time to carefully weigh your options without having a salesperson pushing you to buy.

» COMPARE: Top-rated third-party warranty providers

How do third-party warranties compare to manufacturer warranties?

Here is a side-by-side comparison of third-party warranties with dealership warranties to help you choose the best warranty option.