• Are Extended Car Warranties Really Worth It? (2022)

Here’s our detailed guide to help clear facts and bust myths regarding car warranties

You’ve just purchased a new car or a new-to-you car, and you’re wondering whether or not you should go for one of those fancy extended car warranties you were offered by the dealer or saw on TV. Are extended car warranties actually worth it? Well, the answer to that question depends on your financial situation, the car itself (in terms of reliability, age, and mileage), and which extended car warranty you’re going for. In this guide, we discuss the pros and cons of extended car warranties, the average cost of auto repair, alternatives to extended car warranties, and the shortlist of warranty providers that you should consider.

Are extended car warranties worth the money?

Warranty coverage can come in handy if you don’t want to spend money for repairs later or choose to purchase a vehicle that costs more than usual to run and maintain. In cases of affordable and reliable cars, an extended warranty might not be as useful especially if you have enough saved away to cover any potential unexpected repair bills. Before buying an extended warranty make sure you evaluate providers based on cost, coverage, and convenience, along with the likelihood that you’ll need their service. . Also, don’t forget to compare policies and negotiate to get the best possible deal.

Pros & Cons of Extended Warranty


  • Saves you money in the long run especially when you are dealing with premium or less reliable car brands with an expensive after-sales network.
  • Most plans incorporate added benefits like roadside assistance which can prove to be highly beneficial and a lot less expensive in case of a breakdown.
  • It is a proven way to improve a car’s resale value as used car buyers prefer vehicles that are under warranty.


  • Choose your plan carefully. It is important to pick a plan that is comprehensive in terms of coverage. Some of the more affordable plans might not cover some of the expensive components and you could end up losing money.
  • One always runs the risk of never using the warranty, so for those who keep changing cars frequently, an expensive extended warranty plan might not be a wise financial decision.
  • Overlapping coverage is another issue people frequently run into. Though it is not going to harm the user in any way, it still seems like a waste of hard-earned money.

Learn what matters the most when buying an extended car warranty in our in-depth guide!

Cost of Repair vs. Cost of Extended Warranty

According to reports, an average American spends approximately $1,986 on annual vehicle repairs and maintenance. Your mileage could vary drastically so here are a few things to keep in mind before you run off to get a warranty.

  • In case you choose to go for an affordable car with good reliability records and a trusted dealer network such as Toyota Corolla or a Honda Civic and can afford to pay for unexpected repairs, then it might not be worth splurging on an expensive extended warranty program. However, an affordable plan can still help you reap certain benefits like roadside assistance and even aid in improving your car’s resale value.
  • If you choose to buy an expensive luxury car for long-term use from brands like BMW or Jaguar, then a comprehensive extended warranty program could prove to be extremely beneficial for you and your pocket. Even though you might not spend all that much on periodic maintenance over a more affordable brand, the cost of parts can be a cause for concern. Most luxury brands like to cram their cars with screens and complex electronics which aren’t very reliable and if they do go wrong can cost a fortune to fix, so a comprehensive plan that covers electronic and electrical systems can save you a fortune in the long run.

If you’re not sure what an extended warranty covers and doesn’t cover, we have a guide on the maintenance and repairs car warranties typically cover.

How Does an extended car warranty work?

  • An extended warranty refers to a service contract that covers a range of repairs after the manufacturer’s warranty is over. The coverage of an extended warranty program usually begins after the expiry of the manufacturer’s factory warranty program.
  • A typical Extended Warranty program covers repair and replacement costs of electrical and mechanical components, which in some cases include problem areas not covered by the manufacturer.

- A warranty program can last anywhere from one to eight years and most manufacturers offer in-house extended warranty programs at the time of purchase.

  • Both third-party and manufacturer warranty programs start from as low as $1000 and pre-repair deductibles reach as high as $100.
  • Warranty coverage can come in handy if you don’t want to spend money later or choose to purchase a vehicle that costs higher than usual to run and maintain. In cases of affordable and reliable cars, the warranties might not be as useful especially if you walk around with enough savings to cover occasional repair bills.
  • Before buying an extended warranty make sure you evaluate providers based on cost, coverage, and convenience. Also, don’t forget to compare policies and negotiate to get the best possible deal.

Learn about the difference between extended car warranties and mechanical breakdown insurance!

Manufacturer vs. Third-Party Extended Warranty Programs

What is a Manufacturer Warranty?

Extended warranty programs provided by the manufacturer are more convenient when it comes to making claims and promise to offer a hassle-free experience. They can also be added at the time of purchase making it the least cumbersome option when it comes to extended warranties however you will end up paying interest on it if you go for any form of financing at the time of purchase. So consider a manufacturer plan in cases where you plan to pay for your car upfront.

What is a Third-Party Warranty?

As is the case with most insurance companies, third-party warranty providers offer a lot of perks such as the convenience of choosing your preferred repair shop, affordable plans with flexible payment options, the ability to opt-in even after the manufacturer’s factory warranty runs out, and more. However, processing claims and tying up with your local repair shops might not be as seamless an experience as the one offered by a dealership. So consider a third-party warranty only after studying the claim process and speak to your nearest repair shop for the best possible results.

Learn all about the different types of car warranties in our in-depth guide don’t he different types of warranties.

Average Cost of Auto Repairs

According to Liberty Mutual, here are a few repairs that cost between $500 and $1,000 on average and some of the most expensive items to replace and repair along with their average costs.

Repair Cost
Water pump replacement $300 to $750
Radiator replacement $500
Timing or a serpentine belt replacement $500 to $950
Airbag replacement $3,000 to $6,000
Transmission replacement $1,500 to $3,000
Suspension system replacement $1,500 to $3,500
Head gasket replacement $1,000 to $1,500

But always read the complete policy and keep note of everything that’s covered by your warranty provider so that you don’t get any surprises. All said and done, if you plan to buy a car and keep it for a long time, then an extended warranty can come in handy, but for short-term buyers who change cars frequently, it might not be worth the extra cash.

Not sure if you need an extended car warranty? We have an in-depth guide on what you need to consider before purchasing your new extended warranty.

What Are The Top Extended Car Warranty Providers?

When it comes to third-party warranty providers, we strongly recommend getting in touch with them to try and get the best deal since most of them will offer you a discount over the quoted price if you ask for one. Olive and Endurance are some of the best third-party warranty providers that offer the option of transferring ownership. Here’s a brief review of these providers:


Uproar is based out of Seattle, Washington, but it’s not like any other extended car warranty company out there. Uproar bills itself as an innovator, which makes a lot of sense considering it’s the first extended warranty company to offer a 100-percent digital, subscription-based experience. The main highlights of uproar include an instant quote and signup online, same-day coverage, no long-term commitments, transparency, and no aggressive salespeople or robocalls. They are BBB accredited and have five-star ratings from both Google and Consumer Affairs.


With one of the highest satisfaction rates in the industry, a result of their extremely reasonable pricing structure, Olive is yet another provider that has built up quite a fan following. And the cheaper prices mean you can set aside those saving and use them towards routine maintenance.

  • For cars up to 10 years old/ 140k miles
  • 100% online extended warranty solution with customizable plans
  • File claims online 24/7
  • Affordable monthly payments
  • Call for a quote & get a free $5 gift card

Forever Car

This brand is a well-reputed one and offers a plethora of options. There Platinum Plus warranty plan covers repair costs for both mechanical breakdowns and wear-and-tear items such as windshield wipers, fuses, light bulbs, and brake pads.

  • 4 distinct warranty plans spanning a wide price range
  • Cut repair costs with full protection for your vehicle
  • Inspection required before a claim can be filed
  • Deductibles range from $0 to $500


Endurance is one of the biggest names in the third-part warranty space and offers a plethora of plans to cater to a wide range of customer needs. The Endurance Advantage™ plan covers mechanical breakdowns and maintenance through three levels: Preferred, Plus, and Prime. These plans cover all basic maintenance parameters like oil changes, engine checks, and brake pad replacements, along with additional services like roadside assistance, towing, and rental car reimbursement. Some of the other benefits include:

  • Coverage for cars up to 20 years old
  • Basic powertrain warranty options are available
  • Inspection required before a claim can be filed
  • Extra perks with all-inclusive membership
  • Join & save $300 on a protection plan


They offer coverage for cars with up to 250,000 miles which makes them a great choice for people who plan to purchase a warranty for their heavily used vehicles. They offer a wide range of policies some of which offer industry-leading claim filing processes. With an A+ rating from the Better Business Bureau, CARCHEX should be on your list when shopping for an extended warranty.

  • Covers cars with up to 250k miles
  • First-rate full-coverage protection for new and used vehicles
  • The claim filing process depends on the policy
  • No-haggle, low-price guarantee
  • A+ rating from the Better Business Bureau

Not sure if you already have an extended warranty?This guide will teach you how to find out for sure,so you don’t buy something you don’t need.

Alternatives to Extended Warranties

After the manufacturer’s factory warranty plan runs out, we recommend getting an extended warranty to ensure the best possible coverage for your vehicle without having to break the bank. But if an extended warranty isn’t for you, there are a couple of other options that could help ensure continued coverage for your vehicle.

Mechanical breakdown insurance commonly known as MBI is a form of coverage offered by insurance companies as an add-on service on top of your existing auto insurance policy. An MBI coverage means that as an extension of your car’s insurance policy you get coverage for unexpected repair bills caused due to untimely electrical and mechanical failures.

Learn how to get an extended warranty even after your coverage has lapsed!

Mechanical breakdown insurance and extended warranties do have a lot of factors in common. For instance, both offer coverage for repairs on certain parts and systems. None of these programs will cover routine maintenance (some high-end extended warranty packages might for a limited time, damage from misuse, or replace perishable parts like wipers, bushes, brake pads, etc that are subject to routine wear and tear.

If you do not want to buy either an extended warranty or an MBI, then we recommend opening a dedicated savings account to cater to unforeseen repairs and related expenditures.

Make sure to check out the worst extended car warranty companies so you don’t do business with the wrong one!

Bhavik Sreenath
Bhavik Sreenath
A keen automotive enthusiast with a love for anything with engines. He loves discovering the world of cars and technology to explore new boundaries in the field of modern-day journalism.  Read full bio
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