Everything You Should Know About Extended Car Warranties

The good news is, you don’t have to get confused when trying to understand the basic concepts and little details of extended warranties. You actually don’t need to know all that much to decide if an extended warranty is for you. 

In fact, all you really need to know is this: 

So, if you want the extra coverage you enjoyed with the factory powertrain and bumper-to-bumper warranty, an extended warranty is the way to go. But what do you actually get with one? Are they really the same as factory warranties? How do you get the best one?

If you are searching for more information, read on for our extended guide that demystifies extended car warranties.

Extended car warranties aren’t something most gearheads spend a lot of time studying. Why review a lengthy service contract when you can spend the time fine-tuning or upgrading your ride? So, even if you have or want an extended warranty, there’s a good chance you don’t know that much about it.

The first thing to remember is that extended warranties are just like any other car warranty. Yes, there are some major differences between factory and extended warranties, but they all do the same basic thing: promise to repair or replace in certain conditions.

This is why it helps to know a thing or two about car warranties in general.

It helps to know what a general car warranty actually is to know why an extended warranty may be beneficial. Automotive manufacturers and dealerships hype up the importance of warranties all the time without explaining what they are. This leads to a lot of confusion and misconceptions about what they actually cover.

On paper, car warranties are pretty simple in concept:

A car warranty is meant to give you, the customer, some peace of mind. If something goes wrong with the vehicle, especially if it’s new, you have a way to get it fixed. Basic factory warranties, for example, allow you to bring the car to an authorized garage or dealership and get the issue fixed for free.

Of course, things are more complicated than this basic promise because all car warranties have certain limitations. Warranties don’t always cover repairs, and they don’t last forever.

Specific limitations of car warranties can include:

The problem many people find with car warranties is the lack of information to understand what the warranty covers. It’s easy to be surprised when you discover that your car warranty doesn’t cover an issue you thought it did. 

This is why it’s always important to know the basics of any warranty, factory or extended. The details of the coverage and the limitations it has will let you know what circumstances the warranty will apply and when you may be paying out-of-pocket.

This is especially true with extended warranties that differ from provider to provider.

For the most part, extended car warranties act just like any other type of automotive warranty. The promise to fix issues may come from the manufacturer or a third party, but the end result tends to be the same: If something goes wrong, someone will do something about it under the right conditions. 

The complication with extended warranties is the different types many dealerships and third parties offer. While there is usually just one factory warranty you get with a new car, your options will grow dramatically if you are searching for an extended warranty.

Even a single manufacturer can have different service plans or extra services to add for an additional cost. Third-party providers tend to offer entire warranty lineups so you can choose the right plan and tailor it to your needs.

This is where an important difference comes in: true extended warranties versus vehicle service contracts:

There are more similarities than differences between the two types of extension options, but it helps to know how they differ. At the very least, this information will help dispel some misconceptions and help you make the best choice for extending your coverage. 

The differences between true extended warranties and vehicle service contracts are just the tip of the iceberg of things that confuse countless vehicle owners. With so much information that is either conflicting or misleading, it’s easy to buy an extended warranty that won’t actually give you the coverage you want or need. 

So, let’s set the record straight about a few things.

Most people learn of the major differences between factory and extended warranties when the clock runs out on the original warranty coverage. If you know ahead of time what these differences are, however, you can make a smart decision about what you want to do when the time comes. 

Keep in mind, there are plenty of similarities between the two as well. This is why things can be confusing when researching the two. So, to keep them separate, keep these major differences in mind:

In general, you can get better coverage with an extended warranty over the factory coverage. Some vehicle owners, in fact, choose to include an extended warranty even when the factory coverage is still in effect. That said, whether you should get one or not depends on several factors.

There is no law saying you need to have an extended warranty to drive on the roads with your vehicle. As long as you have the minimum level of automotive insurance legally required in your area, you can drive as much as you want.

The point of an extended warranty is to save you money—ideally, more money than what you would be spending on costly repairs out-of-pocket. This means an extended warranty can be valuable under certain conditions. For example:

The challenge with extended warranties is that they aren’t valuable until you need them. Until they kick in and reduce repair costs, you are just spending money on the warranty itself.

That is why we recommend setting a budget and finding an extended warranty plan that balances the costs and coverage you want for you vehicle. It’s important to find a plan that you’ll actually use on a periodic or regular basis.

All extended warranty plans are different in terms of what parts and repairs they cover. Some follow fairly strict standards that mimic factory warranties. Others may cover more parts and repairs if the plan is designed to be comprehensive. 

Since all warranty plans are different, the best way to compare what they do and don’t cover is by looking at the list of inclusions and exclusions:

In addition to the inclusions and exclusions, you should also look at the scope of the warranty:

Extended warranties are typically easy to use, especially compared to auto repair insurance, since there is less (if any) of a claims process. To take advantage of the coverage, however, you need to have it first.

One challenge many first-time warranty buyers experience is figuring out the cost of a warranty plan. There is no golden standard for pricing in the extended auto warranty industry. Prices vary between providers, plans, and the individual customer.

The real challenge is the fact that extended warranty costs are extremely dependent on the individual customer and their vehicle. Providers will generally have a price range for each plan and algorithms that factor in different things to determine the final cost to the customer.

These factors can include:

While extended warranty pricing can seem fairly complicated given the number of factors, there are a few advantages to how things work. First, the large variety of factors give you some room to personalize a plan to fit your budget. 

If you don’t need a lengthy coverage period or inclusion list, for example, you can keep costs down by finding a plan that offers minimal coverage. Your own driving history can also make a positive impact.

Second, there may be some room for negotiating the final price with the dealership or third-party provider. Like the price of a vehicle, dealerships have some room to negotiate with factory extended warranties. If you buy a used vehicle from a manufacturer dealership, this is a good time to negotiate.

Beyond decreasing the price of the warranty, negotiating with a dealership can also decrease your interest on an auto loan. Dealerships are allowed to combine the warranty cost with the price of the car so you pay everything at once. If you get an auto loan, you’ll pay interest on both the car and warranty. 

Negotiating with third-party providers can be more difficult since it depends on the willingness of the individual company. In fact, getting a good price with a third-party provider typically doesn’t involve negotiating. Instead, it relies on the personalization the provider can offer to you.

Working with a service agent, the best providers make it easy to choose a plan and tailor it to fit within your budget. If a provider doesn’t offer this level of support, we recommend checking out its competitors until you find a company with better customer support. 

Finally, you can sometimes drive down the cost of a warranty by shopping for mechanical breakdown or auto repair insurance at the same time. Since auto repair insurance will likely come from a competitor, the warranty provider may take an extra step or two to win your business over the insurance company. 

Buying an extended warranty is typically straightforward. If you buy a manufacturer’s extended warranty, you will most likely get it through a local dealership. This is common for used vehicles that aren’t covered by a CPO warranty.

If you purchase a third-party extended warranty, this is usually done online. Third-party options allow you to shop around more and compare different options. Some providers will even give you a free quote to predict how much it will cost.

If and when the time comes to get your car repaired, using your extended warranty will involve a claims process to get the repairs approved ahead of time. The warranty provider may deny the claim, in which case you will have to pay out-of-pocket or explore other options. If the repair is in the warranty’s inclusions, however, this is less likely to happen.

Denials can happen for a number of reasons:

It helps to keep track of regular maintenance (keep records) and to avoid modifying the vehicle unnecessarily. If you like to tinker with your vehicle or use it for specific purposes like racing, you may need a specialty warranty for coverage. 

Once a claim is approved, you can then take your vehicle to an approved auto shop to get the work done. Unlike insurance that typically reimburses you for the repair costs, you likely won’t have to pay anything to an approved auto shop that works with the warranty provider.

Extended auto warranties can be difficult to understand partly because of the amount and complexity of the information and partly because you don’t know what you don’t know. These information gaps are hard to identify on your own.

So, this section is all about the random things you should know about extended auto warranties that may help you decide if it’s the right option for you and how to find the right one.

It can be tempting to buy an extended car warranty when your vehicle actually has some repair work that needs to get done. Why not? If the warranty covers the expense, the amount that you pay for the warranty should be tiny compared to the potential repair cost.

Unfortunately, this logic doesn’t pan out, much to the dismay of uneducated warranty buyers. The problem is that warranties don’t cover pre-existing conditions. In other words, if your vehicle already has some issues with the engine, for example, you won’t be able to use a new warranty to reduce or eliminate the repair costs. Any issue that develops after you have the warranty, however, is fair game if it’s covered. 

Warranty providers enforce this pre-existing condition policy by implementing a waiting period after you buy the warranty. Commonly, you have to wait a whole month before you can use the warranty coverage for repair costs. In this time, the provider can see if your vehicle functions normally. 

This can feel like a disadvantage since you have to wait to use something you just bought, but there is a silver lining to the waiting period. The average 30-day wait time also tends to include a 30-day, money-back guarantee policy so you can change your mind. The waiting period also eliminates the need and cost of hiring an inspector as well.

Don’t get confused with auto repair insurance, mechanical breakdown insurance, extended car warranties, and vehicle service contracts. It’s easy to think they are all the same, and some providers even advertise one as the other. In reality, however, these differences can impact your costs and coverage.

The differences you need to remember include:

The bottom line is to know what you are buying when you seeking out coverage options for your vehicle. It’s important to know if you are buying an insurance policy or a vehicle service contract so you can manage your expectations, costs, and needs accordingly.

It’s not uncommon for factory extended warranties to require you to follow a specific maintenance schedule to maintain your coverage. This is done to make sure your vehicle will continue to run, keeping costs low for you and the factory. 

It’s important to understand the specific requirements of the scheduled maintenance. Some automakers, for example, will only allow you to get the maintenance work done at an authorized car repair shop or dealership. 

The good news is that regular maintenance isn’t time-consuming or costly compared to the price of mechanical repairs. Your local dealership should provide a simple go-to source for any information you need in terms of what work or inspection must be done at what time. 

Extended warranties offer a lot of coverage for different types of issues and repairs, but almost all have one major gap: maintenance costs. The same is true for most auto repair insurance policies as well. 

When it comes to preventative, routine maintenance, both extended warranties and MBI policies leave it out since they cover mechanical repairs. In other words, if something goes wrong and the issue is covered by the policy, you’re good to go. If you want to prevent an issue from happening with routine maintenance, the expense is on you. 

There are certain steps you can take to lower maintenance costs. Doing some of the tasks yourself, like changing your own oil, takes away labor costs. You can also shop around for different prices and deals available at different garages.

You should also keep in mind that routine maintenance is cost-effective in the long run. The more you upkeep your vehicle, the less likely it is to break down in the future. 

The best way to find the right extended warranty is to think about your needs and research the options ahead of time. The process can be slow while you take the time to consider your options, but it’s not difficult. In fact, all of the work can be done from the comfort of your own home.

Researching and comparing warranty providers is a must. Unless you know what different companies offer, you won’t have the best understanding of what’s available to you. Once you have this information, however, you’ll be in a great position to decide where to spend your money.

The best place to start is by taking stock of your needs out of an extended warranty. The most useless warranty is one that doesn’t cover your needs. So, knowing what they are ahead of time will let you consider different options the smart way. 

Your starting point will largely depend on what kind of car you are trying to cover. All vehicles have different needs in terms of service and repair costs they may have. This depends on the make, model, history, and age of the vehicle.

Most people find themselves looking for an extended warranty when buying a used vehicle that has an expired manufacturer’s warranty. This is common for many vehicles older than three years or that have more than 36,000 miles on the engine. While some warranties last longer, these limits are the most common in the industry today. 

When you have a used car, this is the perfect time for getting a used car extended warranty. This is especially true when you aren’t quite sure about the condition of the vehicle. If you feel like the car may have some unexpected issues in the future, an extended warranty may be a good blanket.

For used cars, we recommend plans that:

An extended warranty for a typical used car should cover unknown issues more than anything else. Depending on the age of the vehicle, you may find extra plans like powertrain warranties can also keep the most important parts of a vehicle protected as the vehicle gets older.

Many high-mileage vehicle owners experience difficulties finding warranty coverage once the vehicle hits the 100k-mile mark. At that point, nearly all factory warranties have expired. For extended warranties, the options shrink to third-party providers that have one or two high-mileage plans.

While the pickings get slimmer, the quality of the plans is still high from reputable providers. Better still, these plans are better suited for the issues high-mileage vehicles typically experience when they age, especially around the powertrain. This means you will likely get more use from the right plan.

Make sure a high-mileage plan includes:

The main idea of a high-mileage extended warranty is to cover the vehicle for common issues all older cars develop. A plan that covers these issues will save you money on repairs that can add up in a vehicle’s later years. 

At first, it may not make sense to find an extended warranty for a new vehicle. Since all new vehicles come with a factory warranty, what is the point? There is some truth that extended warranties aren’t as valuable for new cars as for older vehicles, but they are still worth considering.

Depending on the plan, extended warranties may cover more issues than the factory warranty itself, especially for things not related to manufacturing and material defects. The extra perks each provider offers may also add some value since factory warranties tend to be bare in extras.

The best extended warranty plans for new cars include:

The decision to buy an extended warranty for a new vehicle is a bit of a coin toss. You aren’t losing out if you don’t have extended coverage, but it might not hurt to have it either. Ultimately, you will have to weigh the cost of a plan against its potential usefulness.

Vintage and antique cars are difficult to get covered with an extended warranty. Most warranty plans cap off the maximum limits at ten years and 250,000 miles. This will automatically disclude any true classic car that is 25 years or older.

Like high-mileage cars, the pickings may be slim, but they do exist. You’ll likely need to find a specialty provider that has a plan designed specifically for old vehicles. Keep in mind, however, these plans tend to only cover newer classic vehicles.

A classic car extended warranty needs to have:

It’s worth taking some extra time to research your options for classic car extended warranties because of the lack of options. You may need time to find specialty warranty providers that actually offer a good plan. If nothing shows up, alternatives like classic auto insurance are also available. 

Where do you go to actually find different warranty providers? This is something all vehicle owners struggle with when they make the decision to buy an extended warranty. With so many options to consider, it can be a challenge to know who is more reputable than others in the industry.

This is also a challenge we face when writing our warranty reviews. Since we want to provide accurate, helpful reviews to our readers, we take some extra strides to vet the information on each company we review. 

As a result, we’ve developed a helpful list of go-to resources and tools you can use. Besides just using your favorite search engine, these resources will often point you in the right direction towards reputable providers. Best of all, these resources will help you compare and assess the providers you find.

It helps to have a third-party resource to get unbiased reviews of different extended warranties and their providers. While provider websites are a good source of plan-specific information, you can’t count on the company to be unbiased when presenting the important information. 

This is where third-party sites give you an advantage.

We use a number of third-party reviewers when checking out the latest extended warranty options or new companies that enter into the mix every now and then. A good majority of these sites are solely focused on reviews, meaning they cover a large swathe of services and companies in and out of the automotive space. 

Some of our favorites include:

As you research different warranty providers, we recommend using as many of these resources as possible. Having a single independent take on warranty providers is great, but multiple reviews will give you a larger picture of what users and review sites like or dislike about them. 

Different third-party sites also tend to have different review processes or areas that they consider. In other words, you’ll get a more in-depth understanding of a third-party provider through multiple reviews that look at different things. 

While we don’t recommend using provider sites for assessing a company’s reputation or customer service, they are invaluable for finding plan-specific information. In fact, there’s no better resource for plan information than the actual provider itself.

All great third-party providers have a website that lists out the available plans and coverage/limitation details. If a provider doesn’t offer this information in a clear and understandable way, it’s probably best to avoid them altogether, since it’s important to have the details upfront. 

The best sites also have a free quote option, so you can get information that is personalized to you. Since plan costs are always dependent on your specific vehicle, driving history, and other factors, a free quote can give you a better idea of what you might pay personally. It’s also the only reliable way to compare the prices of different plans. 

What does an automotive news site have to do with researching extended car warranties? We like to think a lot. At The Drive, we often look beyond the fancy, speedy cars to research and review the accessories and policies that make them better. The same goes for factory and extended warranties.

One thing that we like to do differently is to look closer at individual warranty plans. You’ll find a number of our in-depth reviews around the site for both factory and extended warranty options. If you want to know exactly what you’ll get with a Dodge warranty, for example, we have you covered.

As you continue to research your extended warranty options, check out these in-depth reviews to get a sense of the specific details and major differences between these options. You can also use our large swathe of warranty informational content to learn the things automakers aren’t telling you about their warranties. 

If your research goes well, you will likely have a number of warranty providers to consider in addition to the individual plans each provider offers. We recommend taking some time to compare each provider before looking at individual plans so you know you are going with a reputable company.

More importantly, you’ll also know you are going with a customer-friendly company. Extended warranty providers are usually the first point of contact when you have an issue you want to fix under the warranty.

In general, you need to ask:

While some warranty providers just pass you along to the administrator of the warranty, the best help you every step of the way, especially if they offer their own plans directly. This is why it pays to take the time to look at warranty providers in-depth. 

When checking out a warranty provider, consider the following:

A company’s website is a good place to start to begin assessing some of these qualities. You can get a sense of the company’s size and plan selection just from the website alone. Third-party review sites can also help with assessing a company’s reputation and user experiences with the plans. 

We like to get in touch with third-party providers as well. Speaking with someone from a company’s customer support will give you an idea of how difficult or easy it is to get in touch with a human and receive important information quickly. 

Finally, keep in mind that no company will be perfect. There’s also no golden, foolproof approach to assessing companies. You may find that a company looks good on paper but just doesn’t quite “hit” you right. So, pay attention to your gut feeling in addition to everything you find.

At some point, you will need to actually sit down and start considering different warranty options. In other words, you need a few plans to really look at and compare against each other. This way, you’ll begin to see the similarities and differences between different options and which one makes more sense for you.

Comparing warranty plans can be relatively straightforward if options are drastically different, but expect to do a little digging for similar plans. When plans have a coverage or limitations, for example, they can appear almost equal until you look at the minute details in the inclusions or exclusions. 

Here are a few points you can check out to compare different plans:

Like warranty providers, comparing different plans may come down to minute details or the gut feeling you have with one over another. The best plans fit your specific vehicular needs, so take your time to really consider your options if possible. 

For some people, choosing an extended auto warranty is a simple matter; some choices can be obviously better than others or one plan just might hit all of the checkmarks the vehicle owner has. For others, however, the decision isn’t so easy. 

Most people find the choice difficult when the plans are similar enough that there’s no clear winner. This is extremely common with typical extended warranties that mimic factory powertrain and comprehensive options.

If you find yourself struggling to figure out what the best option is, there are a few steps you can take to really make the decision clear:

It’s important to have as much information as you need to feel like you understand the warranty options available to you. This way, you are more likely to feel confident in your decision and won’t be surprised by unexpected details or limitations that may come up when you need to apply your warranty. 

It can be difficult to realize it given the different names, terms, and conditions, but there are actually other options to keep your vehicle covered when mechanical repairs are necessary. More importantly, you can use many of these alternatives in addition to an extended warranty for extra coverage.

Keep in mind that no solution will cover your whole car in all events and scenarios. So, it’s helpful to know how these options differ from each other to get the best coverage for your vehicle.

All vehicles operating legally on the road have some form of automotive insurance as a basic level of coverage. Auto insurance tends to kick in when accidents happen to address costs related to mechanical repairs, litigation, and medical issues.

The tricky thing with auto insurance is that it comes in several different forms that you can stack on top of each other for different levels of coverage. Some forms cover mechanical repairs, but others have nothing to do with fixing a car.

The types of auto insurance that cover certain vehicle repairs are:

For reference, the most common forms of auto insurance that don’t involve vehicle repairs are:

As stated above, any car driving legally will have some form of auto insurance. Unfortunately, none of these coverages will help if your vehicle experiences issues with normal aging or work that you’ve done on the vehicle. 

Mechanical breakdown insurance (MBI), also known as auto repair insurance, is a type of vehicle protection insurance policy that actually gets closer to the coverage of an extended warranty than normal auto insurance. Some people choose MBI over an extended warranty or in addition to a warranty because of the extra coverage. 

The first thing to know is that MBI isn’t normal auto insurance. Instead of covering medical, legal, or incident-related vehicle repairs, MBI kicks in when a vehicle experiences unexpected issues. This means you don’t have to be in an accident to get use out of an MBI policy.

Other important details about MBI include:

We don’t recommend trying to tackle major mechanical repairs on your own, but routine DIY maintenance can actually save you a lot of money on future, major issues. Small things like regular oil and filter changes keep things running smoothly. 

More importantly, regular maintenance is also likely required to keep your warranty. Many warranties require a maintenance schedule to rule out issues developing from improper maintenance of the vehicle.

Despite the complexity of major components like the engine and drivetrain, there are actually plenty of things you can do in your own garage. These include:

There are certain things you can’t inspect or maintain on your own, but this list covers a good majority of steps you can take to reduce maintenance and future repair costs. As long as your warranty provider doesn’t rule out DIY maintenance, these steps will also keep your provider happy with the condition of your vehicle. 

A. Prices can range between $350 to $1,000 a year on average. This is a wide range since prices vary widely between providers and the individual plans they offer. Pricing depends on the vehicle type, vehicle condition, your driving history, and the particulars of the plan. Getting a free quote and speaking with a service agent are the best ways to know the exact price you’ll pay for your warranty. 

A. Warranties from the factory tend to be open to negotiation in terms of price. You can haggle with the dealership to get the price lowered, but we recommend doing this after you have negotiated the price of the vehicle. Third-party extended warranties don’t have as much room for negotiation, but many providers make it easy to personalize the plan that fits your particular budget. 

A. Most likely, no. Insurance providers deal with insurance policies instead of true extended car warranties like you’d get from the factory. You can probably find a good mechanical breakdown insurance policy, however, that covers a lot of the same issues and even offers more perks like roadside assistance. Many major and certain specialty insurance providers offer different MBI plans for different vehicles and uses. 

A. Yes. In fact, some dealerships try to sell you an extended warranty even when you don’t really need it for a new vehicle purchase. If you want the extra coverage, we generally recommend seeking out a third-party warranty that will include different components and extra perks the extended factory warranty will likely lack. 

A. If your car meets the eligibility requirements of a particular warranty plan, yes. Most providers don’t require continuous warranty coverage. Instead, your vehicle will have to be under the age and mileage limits of the plan and be in a satisfactory condition for coverage. All providers and many plans have different requirements, so it pays to shop around before you apply for a particular warranty.

A. While third-party extended warranties generally give you more options and extra perks, factory extended warranties shouldn’t be ignored. If you are satisfied with your car’s factory warranty coverage and just want to expand it past its original expiration date, this is the perfect time to check out the manufacturer’s extension options.