When it’s worth buying an extended warranty for a new car
Christopher Lawrence, founder of AutoAcademics, said extended warranties are generally only worth considering if you can meet several conditions.
“Extended warranties on a new car might be worth considering if the car is all new with no previous versions sold or if it has an entirely new powertrain that has not been sold previously on the market, [and] if you plan on keeping the vehicle longer than the factory warranty period.”
So, buying an extended warranty for a new car can be worth it when:
- You plan on owning the vehicle well beyond the factory warranty period
- The vehicle has either a poor or totally unknown reliability record
- You want the lowest possible price on an extended warranty
When it’s not worth buying an extended warranty
In most cases, it probably isn’t worth buying an extended warranty on a brand-new car.
You’re already covered by your manufacturer’s warranty
Most new cars sold in the U.S. come with a manufacturer’s warranty that lasts for at least three years or 36,000 miles, whichever comes first. A manufacturer’s warranty is typically split into two parts:
- Bumper-to-bumper warranty: A bumper-to-bumper warranty covers virtually everything but wear-and-tear parts like brake pads and clutches, cosmetic items and maintenance.
- Powertrain warranty: A powertrain warranty covers the engine, transmission and drive axle(s).
Some manufacturers offer much more than the industry minimum, too. For example, the best new car warranty is a four-way tie between Hyundai, Mitsubishi, Genesis and Kia, all of which offer five years or 60,000 miles of bumper-to-bumper protection and 10 years or 100,000 miles of powertrain protection.
You want time to think about it first
Some car dealers may pressure you to purchase an extended warranty now instead of later, saying prices will increase over time. But you don’t have to buy an extended warranty at the same time you buy your car, and you can even buy it after your new car's manufacturer warranty runs out. Just bear in mind that costs may increase in some cases, and warranty providers may have restrictions based on your car's age, model and mileage.
Still, your manufacturer’s warranty gives you time to shop around, compare coverage and prices, get a feel for your vehicle’s reliability and simply prepare for another large purchase. Without the pressure to act now, you can research your purchase and make a smarter decision.
Pros and cons of extended auto warranties for new cars
Considering how much extended warranties cost, it’s crucial to weigh the pros and cons before purchasing a policy.
Pros
- Helps cover repair costs after the manufacturer's warranty expires
- Provides peace of mind
- Often cheaper to buy while your car is new
Cons
- Unnecessary when a factory bumper-to-bumper warranty is still active
- May never be needed
- Likely won’t add value to your vehicle when you sell it
What to consider before buying an extended auto warranty for a new car
Here are some additional factors to consider before getting an extended warranty for your new car.
Current manufacturer’s warranty
If your factory bumper-to-bumper warranty lasts four, five or six years, you may not benefit from an extended warranty. For example, if the extended warranty you’re considering is measured from your vehicle’s in-service date, or when you took delivery, a seven-year or 100,000-mile extended warranty may only add a few years of coverage.
How long you plan to own the vehicle
If you’re not sure whether you’ll still have the car in four or five years, an extended warranty likely isn’t a good investment. However, it could be worth paying for if you plan to drive it until it falls apart.
Your vehicle’s reliability
Research your vehicle’s expected reliability ahead of time. Are the cost and frequency of unplanned repairs higher than average? If so, an extended warranty might offer valuable protection.
Extended warranty coverage tier
Exclusionary extended warranties, often called platinum or bumper-to-bumper plans, tend to provide solid coverage. However, lower-tier warranties usually only cover about 20% of the car or less.
Payment options
Some extended warranties must be paid in full upfront, while others let you pay on a monthly basis. Consider which option might work best alongside your new auto loan payments.
You may have the option to roll the extended warranty into your loan payment if you purchase it when you buy the car. While this shouldn't impact the cost of your monthly payment by much, keep in mind that that means you'll be paying interest on that added cost for the life of your loan. That means that if your warranty costs $2,000, you'll pay interest on it that you could avoid if you pay for the warranty in full or monthly.
Warranty provider and its reputation
Choosing the right extended auto warranty provider can mean the difference between getting claims paid or dealing with lots of frustration. A great way to vet potential providers is to read reviews from customers who discuss their actual claims and experience.
For example, Michele, a ConsumerAffairs reviewer in Michigan, said the following about Endurance: “I've had my policy with Endurance for close to four years. The customer service has been good. Whenever I had to submit a claim for my vehicle, I've been satisfied with the process."
Ideally, you want to see a history of happy customers who have had their claims approved and have received good customer service. However, if you see a consistent theme of angry customers who report that the company didn’t hold up its end of the deal, you might want to stay away.
How to decide if you should get an extended warranty for your new car
After reviewing all the considerations for buying an extended warranty, think about your specific situation and ask yourself these questions to decide if it's the right choice for you.
- What is your car's reliability score? Check its vehicle reputation to get a sense of if you'll need to use a warranty on expected repairs.
- How long do you plan to own the car? If you plan to sell it before the factory warranty is up, there's no need for an extended warranty. If you plan to keep it long term, it might be worth considering an extended warranty.
- How much of an emergency fund do you have available for things like car repairs? Consider your monthly budget and risk tolerance here, since you'll have to weigh all of these factors together to determine how much you're willing to pay out-of-pocket for car repairs. If you feel good about how much you have saved for unexpected expenses, you may not need a car warranty.
Depending on your answers, you may want to consider the extended warranty. But if your car has a solid reliability score, you don't plan to keep it long or you feel comfortable with how much you have in emergency savings, you could skip the extended warranty on your new car.
» LEARN: How to avoid the worst extended auto warranty companies
Where can I buy an extended auto warranty?
Regardless of where you buy, always read the fine print before purchasing a policy. Verify what’s covered, how claims are processed and whether the provider has a solid reputation for paying claims promptly.
When you’re ready to purchase an extended auto warranty, you have several options to consider.
Through the dealership
This is the most common option offered when buying a new car. While convenient, dealer-sold warranties are often more expensive and may include markups. If you go this route, be prepared to negotiate.
Directly from the manufacturer
Some automakers offer their own extended warranties, which tend to integrate seamlessly with your vehicle’s existing coverage. These warranties often provide more comprehensive protection but may be limited to newer vehicles still under the original warranty.
Third-party providers
Independent extended auto warranty providers that specialize in extended warranties often offer a range of coverage levels and pricing options.
Financial institutions and credit unions
Some banks and credit unions offer extended warranty plans as a part of their financial services. These may come with competitive rates and flexible payment options, so check with your institution before buying elsewhere.
Alternatives to extended auto warranties
There are a few alternatives to purchasing an extended auto warranty.
- Self-funding repairs: Set aside money in an emergency repair fund to cover future vehicle expenses without relying on a warranty.
- Buy a used car with an existing warranty: If you’re considering a new car with a weak warranty, look for a slightly used car that still has a strong manufacturer’s warranty remaining.
- Mechanical breakdown insurance: Mechanical breakdown insurance offers similar coverage to an extended warranty and may be available through your auto insurance provider.
FAQ
What does an extended warranty cover?
An extended warranty covers specific parts, but how many parts it covers will depend on which plan you choose. A bumper-to-bumper plan can cover over 5,000 parts, while a powertrain plan can cover as few as 50 parts.
What are some common exclusions and limitations of extended warranties?
Extended warranties often don’t cover wear and tear, cosmetic damage, improper maintenance or preexisting conditions. There may also be limitations related to a vehicle’s age and mileage.
How much do extended warranties cost?
Extended warranties typically cost around $1,000 per year of coverage, but that price varies significantly based on your vehicle, warranty provider and coverage term.
How long can extended warranties last?
Some extended car warranties can last up to 10 years, although these are significantly more expensive.
How can extended warranties affect resale value?
An extended warranty may increase your resale value if the policy is transferable to a new owner. However, in most cases, an extended warranty likely won’t add much to your resale value if buyers aren’t interested in an extended warranty policy.
Can you cancel an extended warranty?
Some warranty agreements may allow you to cancel within 30 or 60 days for a full refund or after that point for a partial refund. With the latter, your refund will typically be prorated based on your remaining warranty term, minus any paid claims and an administrative fee.
Bottom line
While it may be tempting to pay for an extended warranty that extends beyond a manufacturer's warranty on a new car, it doesn't make sense in many cases. Since your car's main systems and parts are covered under the manufacturer's warranty, which typically lasts for at least three years or 36,000 miles for bumper-to-bumper coverage and even longer for powertrain coverage, it may be smart to wait until your current coverage is about to expire before considering an extended warranty.
However, it might be worth buying an extended warranty on a brand-new car if you plan to own it for a long time and if the car you’re buying has a short factory warranty along with a poor or unknown reliability record. When browsing extended warranty options, be sure to consider how much you expect to spend on repairs without a warranty, the reputation of your warranty provider and your warranty’s cost, coverage and payment schedule.
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:
- Consumer Financial Protection Bureau, “What Are the Differences Between a Manufacturer’s Warranty and an Extended Vehicle Warranty or Service Contract?” Accessed Aug. 14, 2026.
