Should I buy an extended auto warranty on a used car?
See if you’re the type of person that would benefit the most from extra protection
Buying a used car can save you thousands, but one of the major trade-offs is that you’ll have less warranty protection — if you have any at all.
Once the factory warranty runs out, you’re on the hook for 100% of each repair bill when your car breaks down. Some people may be OK with that. However, others may benefit from buying an extended warranty to protect themselves from repair bills for longer.
We’ve already investigated the overall value of extended warranties in our article on whether an extended car warranty is worth it. In this article, we’ll address how you can tell whether an extended warranty is right for you and your used vehicle.
Who benefits the most from extended warranties? Drivers with less reliable vehicles who plan to own them past the 100,000-mile mark.
Jump to insightOn the flip side, drivers with reliable vehicles who don’t plan to own them long and can afford a large repair bill tend to benefit the least from extended auto warranties.
Jump to insightIf you’re on the fence, consider whether the added peace of mind alone would be worth it to you.
Jump to insightWho should get an extended warranty on a used car?
An extended car warranty is an optional protection plan that helps cover repairs after the manufacturer’s warranty ends. Depending on the kind of person you are and the car you drive, an extended auto warranty can either be a wise choice or an unnecessary cost.
If you meet one or more of the following criteria, you’re more likely to be in the former camp.
Drivers with less reliable vehicles
Vehicles with below-average expected reliability ratings are more likely to encounter part failures and pricey repairs once their factory warranties run out. That means there’s more potential upside to an extended warranty and a greater chance that you’ll end up saving more on covered repairs than you spent on the warranty in the first place.
Wondering how reliable your vehicle is? In 2024, J.D. Power listed these brands as the top 10 least reliable, with the most problems per 100 vehicles after three years of ownership:
Sites like RepairPal can also give you an estimate of how expensive your specific car might be to repair out of warranty. For example, the Ford F-150 costs an average of $788 per year in maintenance and unplanned repairs, according to RepairPal. Gasket replacements are reportedly a common repair for America’s most popular pickup truck, and they’re estimated to cost between $985 and $1,204. With that in mind, an extended powertrain warranty might be a good idea, if not full bumper-to-bumper coverage.
» MORE: How to choose an extended car warranty
Drivers who can’t afford a large repair bill
Even if your vehicle is generally reliable, major repairs are sometimes needed. If you don’t have any way of paying for a large repair bill, an extended warranty might be worth it purely as a means of insuring yourself against catastrophic repair costs.
| Component | Average repair costs | Average replacement costs |
|---|---|---|
| Air conditioning | $430-$521 | $1,319-$2,515 (compressor only) |
| Alternator | N/A | $529-$2,656 |
| Axle | $287-$1,254 | $531-$2,325 |
| Catalytic converter | Varies by vehicle | $933-$4,414 |
| Engine | $2,500-$4,000 (rebuild) | $4,000+ |
| Fuel pump | N/A | $500-$900 |
| Head gasket | N/A | $3,456-$5,459 |
| Radiator | $286-$725 | $765-$1,826 |
| Transfer case | Varies by vehicle | $2,000-$8,000 |
| Transmission | $2,000-$3,500 (rebuild) | $4,000-$7,000 |
An extended warranty certainly isn’t the only way to handle a massive repair bill, but it’s important to have at least some sort of plan in case the worst happens.
Drivers who plan to keep their vehicles long-term
If you intend to drive your vehicle until the wheels fall off, then an extended warranty has a better chance of being useful. Repairs tend to become more frequent as your vehicle reaches 100,000 miles and beyond, meaning you might spend more out of pocket just to keep your car running.
However, the cost of an extended warranty can rise in tandem, which is why it’s sometimes a good idea to buy your extended warranty before your factory warranty runs out.
As always, you want to balance the cost of your extended warranty against the possible benefits it provides. If the warranty prolongs the life of your car and buys you time before you have to replace it, it might be worth the cost.
» MORE: Extended warranties for cars with over 100k miles
Anyone who doesn’t mind paying for added peace of mind
Feelings matter, and if having added protection against surprise repair bills would help you sleep at night, an extended auto warranty might be worth it.
Drivers with reliable vehicles, like Kia owners, may not encounter repairs as often, but they do still happen. As an example — RepairPal data indicates that, on average, Kia vehicles make unplanned trips to the mechanic 0.22 times per year. About 10% of the time, those repairs cost $2,000 or more.
That’s well below the average for the industry, but it goes to show that “reliable” doesn’t mean “bulletproof.” As a litmus test, if you bought an extended warranty and never ended up using it, would it still be worth it to you for the added peace of mind alone? If so, it might be a sensible investment in your mental health.
Who probably shouldn’t get an extended warranty on a used car?
On the other side of the coin, some drivers tend to benefit far less from extended auto warranties and should probably stash their money in an emergency savings account instead.
If you identify with these criteria more than the ones above, you can probably skip the extended warranty.
Drivers with plenty of factory or CPO warranty remaining
Even if you bought (or are buying) your car used, you may still have some of the original factory warranty remaining on it. That’s because the manufacturer’s warranty that comes with every new car sold automatically transfers to new owners until it expires.
The minimum factory warranty is three years or 36,000 miles from new, but Hyundai, Kia, Mitsubishi and Genesis have the best factory warranty as of 2023, with five years or 60,000 miles of bumper-to-bumper coverage. If you purchased a certified pre-owned (CPO) vehicle, you’ll have additional warranty protection on top of that.
In short, be sure to double-check whether your vehicle is already covered under an existing warranty before buying another one.
Drivers with highly reliable vehicles
J.D. Power ranked the following brands as the most reliable, with the fewest problems per 100 vehicles after three years of ownership:
You can also check the expected reliability of your vehicle’s specific make, model and year on sites like Edmunds, RepairPal and Consumer Reports. Generally speaking, the more reliable your vehicle is, the less likely you are to get the full value out of an extended warranty.
People with enough money to cover major repairs
From a purely financial perspective — when you buy an extended warranty, you’re gambling that the warranty will save you more money than it costs you.
However, warranty companies price their products so that they’re likely to come out ahead. Sometimes, this works out, and having a warranty is a net negative cost for the consumer. Sometimes, it doesn’t, and the consumer pays less for the warranty than the warranty company pays out on repairs. Either way, there is some risk involved.
If you absolutely have the means to cover your expected repair bills, you might be better off avoiding this risk and simply paying for repairs out of pocket.
Drivers who frequently swap cars
If you’re the kind of person who likes to swap cars every couple of years, an extended auto warranty probably isn’t a good investment since they don’t transfer between vehicles — only owners.
Some dealers and extended auto warranty companies have made claims that having an extended warranty active on your vehicle increases its resale value. However, we were unable to find any evidence to support the idea that it’s a significant increase.
Pros and cons of extended auto warranties for used cars
To summarize, what are the general pros and cons of purchasing an extended auto warranty on a used car?
Pros
- May save you money on repairs
- Generally more useful as your vehicle ages
- Provides peace of mind
Cons
- Not as useful if you still have factory warranty coverage
- Less valuable if you have a reliable car or significant savings
- Not a good fit for people who frequently change cars
What to consider before buying an extended auto warranty for a used car
There’s no one-size-fits-all answer to whether you should buy an extended car warranty with your used vehicle purchase, but there are some factors to consider when making your decision.
If you’ve reviewed the driver profiles above but are still unsure whether to purchase an extended auto warranty, you can ask yourself the questions below to help you decide.
Does the vehicle have any other warranty coverage?
Many used cars come with warranties. If the car has low mileage, it may still have some of the factory warranty remaining. Alternatively, the previous owner may have purchased a transferable extended warranty, or the manufacturer may have provided an extended warranty as part of a vehicle's certified pre-owned designation.
Before you buy an extended warranty for a used car, find out if it already has any warranty coverage.
What does the warranty cover?
Before you purchase an extended warranty for your used car, check to make sure the new warranty coverage includes any known issues specific to the year, make and model of your vehicle. Look online to see what repairs are commonly needed for your car, try to approximate their costs, and compare them with the price of a warranty.
Bumper-to-bumper warranties are often a better value than lesser coverage, even if they cost more.
How long do you plan to drive the car?
If you plan to drive the car until it's time to tow it to a junkyard, an extended warranty may make sense and extend the life of your vehicle. However, if you just want the car for a few years or are in a hurry to upgrade as soon as you can afford something nicer or newer, purchasing an extended warranty may not be worth the money.
Who is selling the warranty?
If you buy your car from a dealership, you may be faced with a decision about whether to add the extended car warranty cost to your total loan amount. However, adding the cost to your auto loan requires you to pay interest on the extended warranty.
You may get a better deal and more flexible rules about where you can get repair work done if you comparison-shop for an extended warranty from third-party providers.
Do you keep a rainy day fund?
If you have an emergency fund and enough income to replenish it shortly after a financial setback, spending money on an extended warranty may not be the smartest financial decision.
Even if you don't have a rainy day fund, if you have enough wiggle room in your budget to set aside an extra $50 to $100 each month to pay for surprise repairs, you may be better off saving the money instead of purchasing an extended warranty.
Are you likely to use the coverage?
Even if you have great extended car warranty coverage, you may not use it if you have a reliable car.
Before you make a purchase, look closely at the systems and parts that are covered. Make sure you understand the deductible and claim rules, and do some math. If your warranty has a $200 deductible and costs $2,500 over the course of two years, your car would probably have to break down multiple times and require expensive repairs for you to break even.
Even if your car required major repairs costing $600 four times over two years, you'd pay more for your coverage than you would have if you paid 100% of the repair bills out of pocket.
FAQ
What does an extended warranty cover?
An extended warranty covers repairs needed due to manufacturing defects. It doesn’t cover preexisting conditions, routine maintenance, wear and tear or any parts not specifically listed as covered in the contract. Extended warranties also never cover parts that fail due to damage, negligence, abuse or overdue maintenance.
» MORE: What does a car warranty cover?
Do used cars have warranty coverage?
A used car may still have warranty coverage if it came with a dealer warranty or CPO warranty, or if it still has some of the manufacturer’s original warranty remaining.
» MORE: Car warranty check by VIN
Can you purchase an extended auto warranty later?
You don’t need to purchase an extended auto warranty at the same time as your used car.
Additionally, the dealership where you buy your car may only sell warranties from one provider, so you shouldn’t expect to get the most competitive offerings there. You can almost always purchase an extended auto warranty after you've researched your options to find warranty coverage that fits your budget and is appropriate for your vehicle. (Many auto warranty companies have restrictions on the age, make, model and miles of the vehicles they cover, but so do dealerships.)
When you wait to purchase an extended car warranty, you can also avoid paying interest on the price of the warranty since it won't be rolled into your auto loan.
How much does an extended auto warranty cost?
An extended car warranty can cost between $280 and $2,727 per year, averaging out to about $1,000 per year of coverage. This figure represents the average of over 500 quotes we gathered. When considering an extended auto warranty, do your own research and gather multiple quotes for your specific car and the coverage needed.
Bottom line: Are extended car warranties worth it on used cars?
In many cases, an extended warranty on a used car makes sense. It's a great way to save money on expensive repairs, and it could help you keep your car running smoothly for the long haul.
“I've never had a moment's problem with it and I did all the maintenance on it as it came around but it occurred to me that sooner or later, I’m gonna have a problem,” said ConsumerAffairs reviewer William from North Carolina. “Cars are getting expensive these days, even used cars. So, I'll stick with a car that I know like the back of my hand and with an extended warranty.”
However, not all warranties are alike, and they’re not right for everyone. If you want an extended warranty for your used car, it's crucial to research your options carefully and make sure you’re in a position to benefit from extra warranty coverage.
Article sources
- J.D. Power, “Vehicle Dependability Slumps as Rate of Deterioration Increases, J.D. Power Finds.” Accessed May 3, 2024.
- RepairPal, “ Ford F-150 Repair & Maintenance Costs .” Accessed Sept. 14, 2023.
- RepairPal, “ Kia Reliability Rating .” Accessed Sept. 14, 2023.
- J.D. Power, “Vehicle Dependability Slumps as Rate of Deterioration Increases, J.D. Power Finds.” Accessed April 23, 2024.
