Should I Extend My Car Warranty?

Buying a new car involves making a lot of decisions. One of them is: "should I extend my car warranty?" Here are some things to consider.

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Buying a new car is basically an exercise in making a lot of decisions. There's figuring out which car to buy, several options around financing, prepaid maintenance plans, and even the question of: should I extend my car warranty?

There's no one-size-fits-all answer to any of these decisions, but let's dive into that last question a little bit.

Should I extend my car warranty?

At some point in the new car buying process, your dealer will likely want to talk to you about buying an extended warranty. The extended warranty sold by your dealer usually acts as an extension of the warranty that comes with the car, and it'll sometimes have a special marketing name like Honda Care or Ford Protect.

There are also third-party extended warranty products that might be sold by an insurance company or a bank, but the basic gist is the same. These plans extend your warranty so, if something were to go wrong, you can get it fixed with little-to-no out-of-pocket expense (some include a deductible on repairs, so be sure to check the fine print).

An Extended Warranty is an insurance policy

It's important to remember that these are insurance policies, and they can be very profitable for the selling dealership. In essence, buying an extended warranty is making a bet that the repair costs of the vehicle between the expiration of the included warranty and the expiration of the extended warranty will exceed the cost of buying the policy.

Put another way, if your car comes with a three-year/36,000-mile warranty and you buy an extended warranty for $1,800 that extends it to seven-year/100,000-mile, you're buying insurance and betting that the repairs on the car after the initial warranty is over will cost more than $1,800.

Peace of mind

An extended warranty can give you peace of mind. Some car loans last for six or seven years, and the included warranty might only run for half as long. By purchasing an extended warranty and rolling it into your loan (which you can do if you buy it from the dealer directly), you can ensure that you won't find yourself needing to pay repair bills on a car that still has loan payments due on it.

That peace of mind may be worth the cost of the warranty, even if you don't end up using it. It's also likely that the extended warranty is refundable if you decide you don't want it down the line, or if the car is totaled or sold, but check with your dealer on the specifics.

It may also be possible to transfer the extended warranty to a future owner if you sell the car, which could increase your residual value down the line.

Wrap Up

It's ultimately up to you to decide if a car warranty is worth it, but it's worth remembering a few things:

  • Extended car warranties are negotiable, so feel free to ask the dealer to lower the price if you're looking for a better deal
  • Extended car warranties are generally cancellable and refundable later if you change your mind (check the fine print for exactly how to do it), but you usually won't get the same pricing if you decide to buy one later
  • Extended car warranties are an insurance policy, and should be thought of as such. You're trading some money upfront for peace of mind down the line, just like you would with insurance on your house or car

Finally, make sure you do your research and don't feel pressured into buying a product if you aren't comfortable. Extended warranties aren't right for everyone, especially if you aren't planning on keeping the car for many years.

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Jordan Golson
Jordan Golson is a transportation reporter covering cars, trains, planes, future cities, mobility and more — basically, if it moves and doesn’t go to space, he's on it. He is especially interested in the intersection of transportation and technology, and that means he goes deep into electric cars, autonomous vehicle tech, sensors, safety, connectivity, and similar topics.