Extended Auto Warranty: The Pros & Cons

A complete guide to help you decide whether or not an extended auto warranty is for you Extended Auto Warranty: The Pros & Cons drivrzone.com

Driving to your home in a car you just purchased is a great experience. However, the process of purchasing that car can be rather stressful. Making sure you get the best deal means spending a bit of time researching what might be in your budget and comparing the various makes and models.

That being said, when it comes to the time when you have to talk about the contract, many people might not have taken an extended warranty into consideration.

How Extended Warranties Work

If you happen to be purchasing a new car, it more than likely comes with a warranty that is included in the price of the car. With a used car though, you need to determine if an extended warranty is worth the money. When it comes to buying this type of warranty, it comes down to what you are willing to risk.

Because of this, it is critical for you to take a close look at the pros and cons of this type of warranty to figure out whether or not you are willing to pay the price.


  • Cheaper than having to pay for having it fixed when you experience a breakdown.
  • Coverage is customizable.
  • Coverage can give you peace of mind.
  • You will be better able to budget your vehicle expenses.
  • Extended warranties can cover pricey technology and costly repairs.
  • Dealers are the ones who take care of the payments and paperwork.


  • It is a risk.
  • Not every repair will be covered.
  • You might have to only use certain repair shops.
  • This type of warranty can be a bit pricey.

Extended Warranty Pros

Cheaper than having to pay for having it fixed when you experience a breakdown.

The price of this type of warranty can vary depending on things like the make, model, and age of the vehicle, as well as the dealership itself. One thing holds true though, and that is that the cost of an extended warranty is typically much less than what you would have to pay if the vehicle suffered a major system or mechanical failure.

The warranty will actually insure you against those types of potentially devastating expenses later on. If you happen to be financing the vehicle, the dealership will add the cost of the warranty right into the car loan as opposed to you having to pay for it before you drive off in the car.

Coverage is customizable.

Dealerships often have multiple types of warranties that you can choose from. For example, you might be able to choose from a powertrain warranty or one that is bumper to bumper. You can also choose the amount of time the warranty will be good for.

You might determine that the warranty offered by the manufacturer is a bit light in one area or another. Because of this, you may decide that you want the coverage to be more inclusive. To explain more fully, a powertrain warranty might be for a longer period of time than a bumper to bumper warranty. Companies that offer extended warranties offer quite a few options that allow you to customize the warranty. Most of the time, the cost of it is also negotiable.

Coverage can give you peace of mind.

It doesn’t matter if you are able to pay for expensive repairs later on, buying the extended warranty for your vehicle means that you don’t need to worry about it. You will be able to rest easy, confident in the knowledge that when something happens, you won’t be financially responsible for it.

You will be better able to budget your vehicle expenses.

The thing about extended warranties is that if your vehicle experiences a major failure once the warranty that came with it has expired, the cost of repairing it may well be more than the cost of the extended warranty. When it comes to used cars, the extended warranty is a way that allows you to provide yourself with a bit of security in the event that unforeseen issues should arise. An extended warranty from a good company will take care of any repairs that are covered directly so that you won’t even see the repair bills.

Extended warranties can cover pricey technology and costly repairs.

The vehicles of today are incredibly complex and are filled with things like equipment that is computerized, electrical wiring, and expensive tech. When these systems experience a failure, the process of diagnosing, isolating, and repairing the problem can get quite expensive. Since new SUVs, trucks, and cars tend to be more reliable (mechanically speaking) than ever, the tech systems in the vehicle are one of the main reasons for purchasing a warranty of this nature. If you do choose to buy the extended warranty, ensure that it covers tech along with the other major systems in a vehicle. You can also ask the warranty provider to give you a list of exclusions so that you know exactly what it will and won’t cover.

Dealers are the ones who take care of the payments and the paperwork.

When you purchase the extended warranty for a vehicle, those that were offered through the dealership and have been sponsored by the manufacturer of the vehicle, might be quite a bit more expensive. However, the manufacturer will pay the dealer directly for any services that are rendered. On top of that, these warranties typically allow for the owner of the vehicle to have said vehicle repaired at any one of hundreds of dealerships that carries the same brand, regardless of where it is located. This removes the restrictions that might sometimes be included with third party providers of warranties. Also, since the cost of the warranty is tied in with the vehicle’s payments, you won’t need to concern yourself with them.

Extended Warranty Cons

It is a risk.

Nobody knows what will happen in the future. You might not even ever have a need for this type of warranty. If you don’t, you might be out quite a bit of money for the warranty with not a thing to show for it. If you happen to be financing the vehicle in question, you will also be paying for interest on the warranty.

Just as with any other type of insurance, the extended warranty on a vehicle is only able to save you any money if you wind up having to use it. If the vehicle you are buying is in great shape and you will sell it before it gets to the point that it needs major repairs, you will not see a return on those warranty payments. On the other hand, it also means that you have been able to enjoy a few years of driving worry free, and that peace of mind is definitely valuable.

Not every repair will be covered.

Just as with any type of contract, extended warranties come with a lot of fine print. Every warranty will have its own list of exclusions, and these may cover systems, parts, and even repairs that it won’t cover. Make sure that you have read each and every word of the fine print before you sign anything and be sure that you aren’t shelling out tons of dough for coverage that may not be worth it.

Also keep in mind that warranties of this nature can be voided if you don’t follow specific service schedules, use the wrong type of fuel or oil in the vehicle, or install any sort of parts that aren’t approved by the factory.

You might have to only use certain repair shops.

If the warranty that is offered by the dealership is from a third-party provider, you may be restricted to using only those repair shops that partner with the provider of the warranty. If you are considering a move to a new city or state, you might not find any covered repair shops in the vicinity.

This type of warranty can be a bit pricey.

When you purchase an extended warranty, you are essentially making a wager. The wager is that the car you are buying will eventually need more repair work than what the warranty costs. The provider of the warranty is also making a wager. Their wager is that the car won’t need more repairs than the price of the warranty. As with any bet, one side will win, and one will lose.

There Really Isn’t a Right Answer

Some experts in personal finance are strongly against this type of warranty. However, just as with any other financial product on the market, there isn’t a solution that is one size fits all. Make sure that you do your due diligence and consider the tolerance you have for risk. Ask questions while you are at the dealership and be sure that you will be making an educated decision.

Shopping around for the best warranty of this type is only a sensible financial move that can give you peace of mind and assist you in making sure that your vehicle has as long a life as possible.


  1. YouTube – Vehicle Extended Warranties: Vehicle Service Contract Types, Cost, and Pros/Cons
  2. North Carolina Consumers Council – The Pros and Cons of Extended Auto Warranties
  3. Automotive – Pros and Cons of Extended Warranties
  4. Consumer Reports – Extended Auto Warranty