Is an extended car warranty worth it?

If your car isn't super reliable, it could be worth it — for the right price

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We’ve spoken to hundreds of warranty companies and dealerships, gathered thousands of price quotes and collected tens of thousands of reviews from real consumers over the course of our extended car warranty research.

As a result, we feel qualified to help you decide whether an extended car warranty is worth it for you. Keep reading to learn what an extended auto warranty really is, how it works and when one might make the most sense for you and your vehicle.


Key insights

  • In general, an extended warranty is more likely to be worth it if you expect significant problems with your vehicle or you don’t have the means to handle a large repair bill.
  • Extended auto warranties can help protect you from repair costs, but if nothing goes wrong with your vehicle, your extended warranty may provide little more than peace of mind.
  • Extended warranties can cover different parts of your vehicle. Exclusionary (aka bumper-to-bumper) plans often wind up being the best value since they tend to offer more coverage for your money.
  • The keys to getting the most out of an extended warranty are choosing a reputable warranty company, understanding your coverage and making sure you’re in a situation where you’re likely to benefit from your plan.

What does an extended warranty do?

Broadly speaking, an extended car warranty “extends” the length of the factory warranty that came with your car to give you more coverage against repair bills.

(Most extended warranties, even those from your vehicle’s manufacturer, are actually new vehicle service contracts. That means they’re more of an add-on than an extension, but the name stuck regardless.)

Some people end up regretting their warranty purchases because they didn’t understand what they were buying. That’s why we’re starting with the basics. If you want to skip ahead, click here.

Like your factory warranty, an extended warranty can help cover the cost of repairing your vehicle when it breaks down or malfunctions. However, it’s important to note that a warranty won’t necessarily cover every part of your vehicle, and even if it does, it won’t cover those parts all the time.

What does an extended warranty cover?

Factory and extended warranties alike only cover repairs needed due to manufacturing defects. In other words, your warranty will only ever cover parts that fail entirely on their own and not due to some outside cause.

For example, if your infotainment system suddenly stops working for no reason, your bumper-to-bumper warranty would likely cover the cost of the repair. However, if you spill coffee on your infotainment system, the repair likely would not be covered under warranty since it wasn’t a factory defect — it was human error.

For a more mechanical example, if your engine seizes up 5,000 miles into your vehicle’s life, your warranty would almost certainly cover the repair. However, if your engine seizes at 75,000 miles — and the mechanic finds out you haven’t changed the oil in 20,000 miles — your warranty provider will likely deny your claim on the basis that you didn’t perform basic maintenance.

» MORE: What does a car warranty cover?

Extended warranties vary in terms of what parts receive coverage, too. Most extended auto warranties come in three varieties:

  • “Platinum” plans are generally bumper-to-bumper plans, covering 90% of the parts of your car or more. This is often called exclusionary coverage because it covers everything except for a handful of exclusions.
  • “Gold” and “Silver” plans tend to cover between 300 and 800 parts of your car. That may sound like a lot, but it only represents around 15% of the total parts of your car, leaving plenty of gaps in coverage.
  • “Powertrain” plans mimic your factory powertrain warranty, covering just a few dozen parts inside your engine, transmission, drive axle(s) and drive unit, if applicable.
We don’t even sell Gold plans anymore since they result in so much customer disappointment.”
— a Lexus dealership representative

Pros and cons of extended warranties

That coverage is all well and good, but before you purchase an extended warranty, it’s worth at least being aware of the potential downsides.

Extended warranty pros

  • Protection against expensive repairs: Put simply, an extended auto warranty can pay for itself many times over by covering your repair bill when something vital on your vehicle fails.
  • Valuable secondary benefits: In addition to providing warranty coverage, extended warranties can offer other helpful perks. Three years of roadside assistance and just one emergency tow could cost you $300-plus out of pocket. With most extended warranties, these perks are free.
  • Added peace of mind: For many people, a vehicle is the second largest purchase they ever make (after a home). Like a fire extinguisher, an extended warranty can give you peace of mind even if it’s never used.

Extended warranty cons

  • The cost may be more than your warranty saves you: Regardless of how you break it up, the cost of an extended warranty can be quite high — around $800 to $2,000 per year of coverage, depending on your vehicle’s make/model/age. Plus, you may never end up using your warranty, making that money a waste.
  • Non-exclusionary plans are generally a poor value: In our experience, while you may save 20% by purchasing a Gold/Silver plan, your parts coverage will drop by 80%. “We don’t even sell Gold plans anymore since they result in so much customer disappointment,” one Lexus dealership rep told us.
  • Bumper-to-bumper plans still have exclusions: Even the most robust extended warranty on the market won’t cover preexisting conditions, weather- or accident-related damage, abuse, neglect, aftermarket parts, failures caused by aftermarket parts or failures caused by a lack of maintenance. That means you may still have to pay for repairs out of pocket.

» MORE: Pros and cons of extended auto warranties

When an extended car warranty is worth it

Generally speaking, an extended auto warranty is more likely to be worth it if any of the following apply to you:

  • You drive a car that is less reliable than the average vehicle.
  • You can’t afford a big, unexpected repair bill.
  • The cost of your warranty is less than you expect to spend on the repairs it would cover.
  • You don’t mind paying a few thousand dollars just for extra peace of mind.

Let’s break those down even further to help you make an informed choice.

If you drive a less reliable car
This is perhaps the No. 1 determining factor for whether an extended warranty is worth the cost.

If your vehicle is known for lasting 200,000 miles with basic maintenance, you probably don’t need an extended warranty. But, if you buy from a brand with a reported history of poor reliability, like Audi or Mercedes, an extended warranty might be a worthy investment.

If you can’t afford a sudden repair bill
If a surprise $2,500 repair bill would be financially burdensome, it might make sense to start financing a $2,500 extended warranty now to protect yourself from a big repair bill that you won’t necessarily be able to pay off in chunks.

“Having a vehicle protection plan is very valuable when a problem arises. I might have some cash on hand today, but tomorrow I might have none. So if something goes wrong with the car, it's covered,” said Herbert, a ConsumerAffairs reviewer in Texas .

This is especially true if you only own one vehicle or are in a vulnerable financial situation where losing your means of transportation could have a cascade effect that harms other parts of your life. For example, if you need your vehicle to commute to work and you have no other way of getting there, it’s probably wise to prepare for an eventual breakdown — whether that’s with an extended warranty or a rainy day fund.

If the cost of the warranty is less than the cost of expected repairs
An extended warranty is like an insurance policy against pricey repairs. (Not to be confused with car insurance .)

Think of it this way: If the cost of an insurance policy (or extended warranty) is more than the cost of what it can cover, it makes less financial sense to buy one. Paying out of pocket for repairs would actually be cheaper.

How much you should expect to spend on repairs is obviously tied to your vehicle’s reliability, but even reliable vehicles can be at risk of incurring massive repair bills, especially if they’re from a brand known for high repair costs.

Check out the table below to see how much you can expect to pay for major repairs.

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
If you don’t mind paying a few thousand dollars for extra peace of mind
Alternatively, you may want the extra protection just for the sake of better sleep and peace of mind.

Here’s a litmus test: if you spent $2,500 on a three-year plan and never wound up using it, would you regret it? If not, then the added peace of mind might be worth the cost on its own.

If you’re still struggling to decide, Christopher Lawrence, the CEO and owner of AutoAcademics.com, offered some potential tiebreakers based on whether you’re buying new, used or leasing.

  • For leases, an extended auto warranty probably isn’t worth it. “If you're just leasing the car, an extended warranty should not be necessary because most lease terms will end prior to the new car warranty expiring,” he told us.
  • For new cars, it could be worth it if the vehicle has no reliability history to research. “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 standard new car warranty.” Otherwise, an extended warranty on a new car is less likely to be worth the cost.
  • For used cars, Lawrence said buying an extended warranty is more likely to be worth it if there are gaps in the vehicle’s Carfax report. “When buying used, I believe that an extended warranty can be helpful if you do not know the history of the car.” Otherwise, whether or not you should buy an extended warranty on a used car depends on the same reasons we described above.

How to find the right extended warranty

Before we wrap things up, here are some shopping tips to help you find the right extended auto warranty for your situation.

  • Know your car: Does the CVT transmission in your Nissan Sentra often have issues around 50,000 to 100,000 miles? What are the most common issues (and repair costs) in your 2019 Chevy Tahoe? Researching sites like Edmunds and RepairPal can help you know what to expect and how much coverage to purchase.
  • Start with the top-rated warranty companies: We’ve compiled our picks for the best extended car warranty companies based on coverage options, customer reviews and other factors to help you get a head start on your search.
  • Get multiple quotes: You can often get the same bumper-to-bumper protection for less if you shop around. In our experience, one dealer may charge $500 less than another down the street, and a third-party company may charge $1,000 less than both of them.
  • Read consumer reviews that mention claims: When browsing customer reviews for extended warranty companies, pay careful attention to reviews by consumers who actually filed claims. These tend to reveal the most information about a company’s willingness and ability to pay out.

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FAQ

How does an extended car warranty work?

An extended car warranty offers protection against repair bills beyond the term of your factory warranty. For example, if your engine fails at 63,000 miles despite regular oil changes, your extended warranty may cover the cost of the repair — or even replacing your engine.

» MORE: How an extended auto warranty works

When isn’t an extended warranty worth it?

Examples of when an extended auto warranty may not be worth it include but aren’t limited to:

  • When you don’t plan to own your vehicle past the factory warranty period
  • When you drive a vehicle that doesn’t break down a lot
  • When you lease your vehicle
  • When you can afford to pay for catastrophic repairs out of pocket
What does an extended car warranty cost?

On average, a bumper-to-bumper extended car warranty typically costs around $800 to $1,000 per year of added coverage. So, if your car has a four-year/50,000-mile factory warranty and you want a seven-year/100,000-mile Platinum warranty, those extra three years of coverage will typically cost you around $2,400 to $3,000.

Do extended warranties cost more for certain vehicles?

Extended warranty costs can vary wildly based on factors like:

  • Your vehicle’s overall dependability
  • Your vehicle’s age and mileage
  • The cost of parts and labor to repair your car
  • Your chosen deductible
  • Your chosen coverage level

To illustrate, we were once quoted $2,362 for a three-year Platinum plan on a brand-new Toyota Camry. For the same plan on a new BMW M4, we were quoted $7,500.

Can you negotiate the price of an extended car warranty?

Extended warranty prices are negotiable in some cases, but it depends on the provider. We’ve collected over 1,000 price quotes, and in our experience, dealerships are often open to negotiation, while third-party warranty companies are less willing. It’s still worth trying, though. (Learn how to negotiate the easy way in step eight of our article on how to buy a used car.)

Can you buy an extended warranty if your factory warranty has expired?

You can buy an extended warranty once your factory warranty expires, but your options become more limited — and the cost can rise significantly.

The best time to consider purchasing an extended warranty is usually a year or so before your factory warranty expires. At that point, you should have a better idea of how long you’ll keep the car, so you can plan coverage accordingly.

Who sells extended warranties?

Broadly speaking, there are two types of extended warranty providers: manufacturers and third-party warranty companies.

  • First-party extended warranties, like Chevy Protection Plans, are backed by the brand that made your vehicle in the first place and typically extend the exact same coverage you got from the factory.
  • Third-party extended warranties aren’t backed by your car’s manufacturer, but they can offer you more options for coverage and, sometimes, more bang for your buck.

» MORE: What to know about manufacturers’ extended warranties

Do extended warranties come with other perks?

Most extended auto warranties come with perks and benefits that are similar to what’s included with a factory warranty. Those typically include:

  • 24/7 roadside assistance, including lockout assistance, flat-tire changes, fuel deliveries, battery jump-starts and other services.
  • Emergency towing to the nearest dealers (for manufacturers’ extended warranties) or ASE-certified mechanics (for third-party extended warranties).

Extended warranties may also come with:

  • Rental car reimbursements of around $35 to $50 per day to help cover the cost of a rental while your vehicle is in the shop for warranty repair work.
  • Trip interruption reimbursements of up to $200 per day to help cover the cost of meals, lodging and transportation if your car breaks down 100-plus miles from home and requires overnight warranty repairs.

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:
  1. RepairPal, “ Mercedes-Benz Repair & Maintenance Costs .” Accessed Aug. 14, 2023.
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