Whether you own a new or used vehicle, a vehicle extended warranty (also called a vehicle service contract) can offset repair costs. They help you avoid costly out-of-pocket expenses and can make your car more attractive to prospective buyers.
But vehicle warranty providers vary significantly in price, coverage terms and what parts and services they include or exclude. When shopping for a plan, it’s important to compare options carefully and consider your specific vehicle needs. A good place to start is by asking a trusted dealership or auto club for recommendations. They can provide a list of reputable providers with a variety of plans and prices to choose from.
You can also shop online for a plan that best meets your needs. Some companies specialize in providing comprehensive coverage, while others focus on a particular area of the car such as the drivetrain or electrical systems. Still others offer a more limited range of coverage and a more manageable price tag.
The type of plan you need will depend on how much you value peace of mind. Those with significant financial concerns might want to consider purchasing a plan that covers more extensive repairs or even the cost of a replacement vehicle. The most important consideration, however, is finding a company that offers a competitive price and a good track record.
Some of the most recognizable car warranty providers include Endurance, Olive and Square Deal. While they differ in their business model and offerings, each is a reliable choice. We recommend requesting quotes from each company before making a decision.
A good warranty will cover the cost of repair or replacement of an engine, transmission, drivetrain or other major components when the original factory warranty expires. Many will also cover the costs of roadside assistance and towing. Some will allow you to roll the purchase of the warranty into your loan, reducing your initial cash outlay and allowing you to pay for it over time.
Extended warranties are available from the automakers themselves, independent providers and dealers. Those from the manufacturers tend to mimic the bumper-to-bumper and powertrain warranties offered with new vehicles, while third-party contracts often have higher deductibles, may restrict where you can take your car for repairs and may require pre-authorization from the warranty provider before a repair is made.
The average price of a vehicle extended warranty is several thousand dollars, and the price can vary depending on the manufacturer, the length of coverage and the car’s predicted reliability. Unlike insurance, car warranties are not regulated by federal or state authorities, so warranty companies can charge whatever they want. You can save money by rolling the cost of a warranty into your loan payment, but this will also add interest to your overall debt load. You can also cancel your warranty later, but this will likely incur a fee for each cancellation request and could cause you to owe more on your loan.