Weighing the pros and cons of an extended auto warranty
Weigh the pros and cons of extended auto warranties to help you decide if one is right for you.
Pros
- A warranty can help cover the cost of an expensive breakdown.
- Many plans include valuable secondary benefits.
- You can choose how much coverage you want.
- Having coverage can provide peace of mind.
Cons
- The warranty may cost more than it ends up saving you.
- Even the most robust bumper-to-bumper plan has exclusions.
- Some plans can be difficult to cancel.
- There are lots of scams in the industry.
Advantages of extended auto warranties
There are plenty of reasons to purchase an extended auto warranty, such as the ability to customize your level of coverage.
1. You can choose how much coverage you want
Extended auto warranties come in many different coverage levels, including basic powertrain warranties and comprehensive bumper-to-bumper warranties. Powertrain warranties typically cover your engine, transmission and drive axle, while bumper-to-bumper warranties cover all parts on your vehicle except specific exclusions.
Many providers also offer a mid-tier plan that covers more components than a powertrain warranty but is cheaper than a bumper-to-bumper warranty.
2. Plans may include extra benefits
Extended auto warranties typically offer extra benefits, such as 24/7 roadside assistance, trip interruption coverage and rental car reimbursement.
Roadside assistance typically covers towing, fluid deliveries and tire changes.
Trip interruption coverage typically provides reimbursement for lodging and meals when your car breaks down a certain mileage from home.
Rental car reimbursement offers a certain amount of money toward a rental car whenever your car is in the shop for covered repairs.
3. Plans can help cover costly repairs
Depending on the type of coverage you select, your plan may help cover costly repairs. Some repairs, like a head gasket replacement, can cost thousands of dollars. If you have an extended auto warranty, your bill could be reduced to however much your deductible is, which might be as little as $0 or $100.
4. Coverage can provide peace of mind
Some drivers like the reassurance they get from having coverage even if they never file a claim.
For instance, Carlos, a reviewer from California, said they got an extended warranty for their Ford with around 120,000 miles.
“It gave me that extra peace of mind for another three years,” Carlos said. “Everything has been great. All of it was very easy, efficient and affordable.”
Drawbacks of extended auto warranties
Before buying an extended auto warranty, consider the drawbacks:
1. Warranties may cost more than they save
The average extended auto warranty costs around $1,000 per year of coverage for a bumper-to-bumper plan. So, if you buy a three-year plan, your plan may cost around $3,000 total. However, costs may be much higher depending on your vehicle’s make, model, mileage and age.
Given these costs, it’s possible your car won’t need enough repairs to offset the cost of an extended auto warranty.
Average extended warranty costs by coverage type
Basic powertrain plans are generally cheaper than bumper-to-bumper plans.
| Typical annual cost | Typical deductible cost | |
|---|---|---|
| Powertrain coverage | $600 to $750 | $100 |
| Bumper-to-bumper coverage | $1,000 | $0 to $200 |
2. Plans have exclusions and limitations
Auto warranties typically come in the form of stated-component coverage or exclusionary coverage. Stated component coverage means that the plan only covers specifically named components, while exclusionary coverage covers every part unless it’s specifically named as excluded.
Also, no matter which coverage level you choose, plans generally don’t cover repairs needed due to:
Abuse
Misuse
Neglect
Lack of maintenance
Aftermarket parts
Weather
Wear and tear
Routine maintenance
3. Plans may be difficult to cancel
Most extended auto warranty companies provide a refund if you cancel a plan within 30 to 60 days or a partial refund if you cancel after that. Still, many ConsumerAffairs reviewers have said that it’s hard to cancel an extended warranty.
“Cancelling was a nightmare,” said Sharry, a reviewer from Utah. “I had to call multiple times, their customer service is outright disrespectful. The guy actually hung up. I got so fed up I eventually called my bank and cancelled my credit card so they would stop charging it. Turns out, even with a cancelled card[,] they were still adding up the costs every month and mailing it. After multiple tries, and getting the runaround, and being on hold so many times, someone was honest enough to tell me how to REALLY cancel. [...] There's a document you have to print out, and you have to get it [notarized].”
4. Scams are common in the industry
The extended auto warranty business is full of aggressive sales tactics that can look real but aren’t. The Federal Trade Commission (FTC) warns that scammers often call or text people, pretending to know details about their cars. They pressure people to buy fake or overpriced service contracts.
To protect yourself from scams, avoid buying any extended auto warranty from someone where you didn’t initiate contact. Also, don’t give anyone money or personal information before reading a contract. Research any company that you’re interested in and read reviews online before buying a policy.
» READ MORE:How to choose an extended car warranty
How extended car warranties work
To help you avoid some of the disadvantages of extended car warranties, it’s a good idea to learn how they work.
Term lengths
Most extended warranties last for a set time or mileage. Many plans offer coverage for up to eight years or 100,000 miles, whichever comes first. Some third-party providers will cover cars for up to 300,000 miles.
Claims
If your car experiences a mechanical breakdown, you’ll need to go to an in-network repair shop and ask the mechanic to file a claim with your warranty provider. If your claim is approved, your provider will cover the repair bill, minus your deductible.
Coverage
Plans generally only cover repairs or replacements when your vehicle breaks down due to mechanical or electrical failures.
Typical coverages and exclusions
Here are some parts and components that auto warranties typically cover and exclude:
| Typically covered? | |
|---|---|
| Water pump | |
| Fuel injectors | |
| Fuel pump | |
| Key fob | |
| Axle | |
| Catalytic converter | |
| Tires | |
| Brake rotors | |
| Brake pads | |
| Wheels | |
| Paint | |
| Clutches | |
| Oil changes | |
| Shocks and struts | |
| Timing belt | Depends on cause of failure |
| Oil leak | Depends on what caused the leak |
| Wheel bearings | Sometimes (varies by plan) |
| Exhaust | Sometimes (varies by plan) |
| Labor | Sometimes (varies by plan) |
| AC compressor | Sometimes (varies by plan) |
| Transmission | Sometimes (varies by plan) |
» LEARN MORE: Where can you use an extended auto warranty?
Alternatives to extended auto warranties
Here are some of the best alternatives to buying an extended car warranty, especially for a used car:
Open a repair-savings fund: Sometimes, it makes financial sense to save the money you would have spent on an extended warranty and put it in a savings account exclusively for future repairs.
Buy a reliable car and keep up on regular maintenance: Choosing a model with a good reliability record and staying current with oil changes, inspections and minor repairs will help avoid big breakdowns down the road.
Consider mechanical breakdown insurance: Mechanical breakdown insurance (MBI) is usually available only for newer, low-mileage cars, and isn’t available in every state. MBI is often — but not always — easier to buy online and cancel anytime with prorated refunds. The best mechanical insurance companies offer similar benefits compared to extended coverage.
Bottom line
An extended auto warranty may be right for you if you drive a less reliable model, expect to spend more on repairs than on an extended warranty or if you want to pay for peace of mind, even if you never file a claim.
“If an individual does not keep cars for long, the standard warranty would likely be all they need,” said Heather Bono, a finance professor at Auburn University. “However, if they plan to keep it longer or if it is known to be unreliable or have expensive repair costs, it would likely be a beneficial purchase.”
» MORE:Best extended car warranties
FAQ
Can I buy an extended auto warranty after my factory warranty expires?
You can typically buy an extended auto warranty after your factory warranty expires from a third-party extended warranty provider. Auto manufacturers typically require you to purchase a warranty before your factory warranty expires.
Is an extended warranty transferable if I sell my car?
Yes, an extended warranty is typically transferable if you sell your car to a new owner, though you’ll usually need to pay a fee and complete the transfer within a certain timeframe.
Should I buy a manufacturer or third-party extended auto warranty?
Whether you should buy a manufacturer or third-party extended auto warranty depends on your preferences and budget. Manufacturer extended warranties require repairs to be done by factory-trained technicians who use original manufacturer parts. Because of this, they’re typically more expensive than third-party warranties.
Third-party extended auto warranties are usually more affordable than manufacturer extended warranties. They typically let you use any licensed repair facility for repairs, and they may also offer more coverage options or longer terms.
When is the best time to buy an extended auto warranty?
The best time to buy an extended auto warranty is usually before your factory warranty ends since coverage will be cheaper. As your vehicle ages and increases in mileage, coverage will become more expensive.
Article sources
ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
Federal Trade Commission, “Extended Warranties and Service Contracts.” Accessed Sept. 16, 2026.
