.svg){kind=small}
.svg){kind=small}
Here’s the quick answer: Yes, extended warranties are worth it in certain circumstances. However, there are times when it’s reasonable to rather skip.
Here’s the quick answer: Yes, extended warranties are worth it in certain circumstances. However, there are times when it’s reasonable to rather skip.
Nobody wants to add another payment to an already bursting budget. And don’t we pay enough for our cars in any case? Fuel, insurance, maintenance, registration fees, the occasional car wash—it all adds up. The question of whether extended warranties are worth it is completely valid.
Here’s the quick answer: Yes, extended warranties are worth it in certain circumstances.
However, there are times when it’s reasonable to rather give them a skip.
So how do you know what’s right for you?
Below, we’ll be discussing when an extended warranty is worthwhile, what goes into the price, what’s usually covered, and what to consider if you have a used car. We’ll also address self-insurance and spotlight some of the highest-rated extended-warranty providers.
But first, a clarification.
The terms “extended car warranty” and “vehicle service contract” (VSC) are frequently used interchangeably. In the context of this article, when we talk about an extended warranty, what we’re really referring to is a VSC. That is, we’re discussing optional contracts that make provision for specific vehicle repairs.
As the Federal Trade Commission points out, an auto service contract is not the same as an auto warranty. The two are regulated differently. Factory warranties operate at the federal level, while service contracts function at the state level.
That’s because the manufacturer is responsible for the warranty that comes with any new vehicle. You don’t pay an additional fee because it’s already worked into the car’s selling price.
A VSC, on the other hand, is an agreement between you and a service provider. It’s entirely optional and can be canceled. Because you purchase it independently, it’s not regulated by federal law.
And because it’s an independent purchase, you need to know whether it’s a worthwhile investment.
For most of us, cars are functional. They get the kids to school and the dogs to the park. They get us to the office and to meetings and to conferences. Sometimes, our ability to earn a living is solely dependent on them. That’s why we need them to work.
When you’re assessing the value of an extended warranty for you, there are a few factors to weigh up. These are the main points to think about:
The older a car is, the higher the likelihood of breakdowns. According to the Bureau of Transportation Statistics, the average age of in-use vehicles is 12.5 years. That means more Americans will be facing unexpected repair costs.
The reason is simple but inevitable. Age and mileage degrade parts over time. At some point, batteries start failing, and components with long lifespans reach their limits.
You may decide to skip the extended warranty for now, but if your vehicle is getting on in years, it would be wise to prepare yourself for potential problems. One great option is to start an emergency fund for vehicle repairs and add to it consistently.
It’s a well-known fact that certain brands are more dependable than others. In Consumer Reports’ most recent findings on brand reliability, Toyota, Lexus, and Subaru ranked at the top. On the other end of the spectrum, Jeep, Volkswagen, and Nissan models tend to require more frequent trips to the mechanic.
Economy vs luxury brand also factors in. Costlier maintenance is a reality that comes with owning a premium vehicle. Although they’re not necessarily unreliable, luxury brands are more expensive to repair. Bentleys, Porsches, and Aston Martins will come with higher auto-shop invoices than Hyundais, Kias, or Suzukis.
So, is an extended warranty worth it? If you own a car with expensive parts or a high risk of breakdowns, it could well be. Paying for those out of pocket can eat away at your funds.
With that said, even though a brand is reliable, it’s not a guarantee of low repair costs. New or recently redesigned models can be more troublesome than anticipated. It can take time to address manufacturing problems in all-new engines and electronic components. While the factory warranty is valid, that’s an inconvenience, but not financially crippling. Once manufacturer coverage lapses, an extended warranty becomes more appealing.
Brand is a good measure of reliability, but it’s not a guarantee that nothing will ever go wrong.
Between the lower fuel costs and the benefits for the environment, electric and hybrid cars have plenty of appeal. However, those electrical parts can be alarmingly pricey when they need replacing.
A new battery on a compact electric car can cost between $4,000 and $12,000. For larger vehicles, you could be looking at $25,000. Regardless of size, make, or model, that’s a big blow if you’re paying out of pocket.
Electric vehicle warranties are usually longer than those for traditional gas vehicles. It’s common for makers to offer battery protection for 8 years or up to 100,000 miles. However, if your vehicle no longer has manufacturer protection, an extended warranty could save you from an unwelcome shock further down the road.
After traveling 80,000 miles, 67% of vehicles will require at least one major repair. That’s a normal product of wear and tear. It’s also why an extended warranty is often advisable for older cars.
If your car rarely makes it out of your neighborhood, mileage won’t play as much of a role in the decision.
If you’re putting in 15,000 miles or more a year, it’s a different story. Components wear down quicker because they’re being exposed to more heat and pressure. That means more frequent services and more consistent repairs. On balance, an extended car warranty could help you save thousands.
Life is more expensive than ever, and it’s not slowing down. The average adult is already swamped with bills and an income that can only stretch so far. Many of us can’t add another monthly expense, no matter how small, without carefully weighing up what we get in return.
Looking at it that way, it’s easy to dismiss the idea of purchasing an extended car warranty. The problem is that there’s one big question that can’t be dismissed: Can you afford to pay for a serious breakdown out of pocket? And a follow-up: If you can’t, to what extent will an out-of-action car affect your daily life?
With so many variables involved, it can be difficult to leave the world of “could” and “might.” Let’s try to be more specific and use some real numbers, focusing on only one commonly repaired part.
Using estimates from RepairPal, let’s see what it might cost to take care of a faulty transmission:
None of these estimates include taxes and fees, so the final cost will be higher. A more accurate estimate will also take into account your location—this breakdown has only been for illustration purposes.
Sometimes, getting the problem fixed is inconvenient but doable. Other times, it ends in you handing over most of your savings to your mechanic.
Even if the repairs are minor, the expense becomes major when you’re consistently being invoiced for small fixes.
There isn’t a one-size-fits-all answer. The price of an extended warranty will depend on a number of factors, including:
The table below offers a rough cost guide; it’s by no means exhaustive, and coverage will depend on your vehicle and chosen provider.
If you decide that purchasing an extended warranty is worth it for you, carefully review the agreement. Aside from the deductible, here are some other additional expenses to look out for:
What’s covered under an extended warranty will depend on the agreement between you and your provider. Here’s a brief overview of the most common plan types.
At the most basic level, an extended warranty will cover the parts that make your car move. In other words, your engine, transmission, and drive systems will be protected if you select the powertrain option.
Going up a notch, stated-component agreements will explicitly note which parts are eligible for coverage. As a mid-level option, the scope is broader than a powertrain plan. For example, electrical components and cooling systems might be included. If it’s not explicitly stated, though, it’s not covered—be mindful of that.
The most comprehensive option is the bumper-to-bumper, or exclusionary, warranty. You’ll be covered for most of the major components between your front and rear bumpers (but not the bumpers themselves).
Although it’s more comprehensive, it’s not absolute coverage.
Wear and tear is excluded from extended warranties. Similarly, a provider won’t pay for environmental damage, nor will they cover the cost of damage caused by accidents or poor driving habits. Fluid topups, oil changes, spark-plug changes, and other regular maintenance will also fall on you.
Under certain circumstances, an extended warranty on a used car is worth it. Depending on how old the vehicle is and how many miles it’s got, as well as the make, a warranty can offer much-needed peace of mind.
Also, if you’re planning on hanging on to the car for at least another three years, it’s a good investment.
Before anything else, make sure the vehicle isn’t still under factory warranty. You can check your warranty by VIN, which gives you information about the make, model, and year. The 17-digit number will be on the vehicle registration papers, on the driver’s side front windshield, or on the driver’s side door-jamb sticker.
Once you’ve got the VIN, run it through a warranty checker. If the vehicle is still under factory warranty, you may decide to purchase an extended plan through the manufacturer to prolong the coverage. If you do, you would need to make the purchase before the factory warranty lapses.
If the factory warranty has expired and you opt for an extended vehicle warranty, you can compare quotes from third-party providers. More on that below.
As the term suggests, if you self-insure instead of taking out an extended warranty, you cover yourself. The core point still stands: If you don’t have a provider to claim from, you’ll need to be able to pay for breaks and replacements yourself.
In the context of vehicle insurance, “self-insurance” takes on a more specific meaning. Here, the term relates to a driver who is personally responsible for what an insurance company would typically cover. In other words, if they get into an accident, they aren’t protected by a policy.
Because car insurance is a legal requirement in 49 states, there are rules and regulations that need to be followed. These are determined at the state level. Failure to comply can lead to legal consequences or penalization.
Unlike vehicle insurance, purchasing an extended warranty is entirely optional (despite what pushy salespeople will try to make you believe).
If you’re already self-insured, you’ll be used to not having policy protection to fall back on.
On the other hand, because you need to have sufficient funds available for damages in the event of an accident, an extended warranty could be very valuable. It offers certainty, balancing out some of the uncertainty of being a self-insured driver.
If you’ve had breakdowns before and paid for them out of pocket, you should have a better idea of the costs involved. Every repair is going to vary depending on the part, man hours, skill level, and vehicle brand involved.
Of the 37% of vehicle owners who hold extended warranties, only 10% have used them, according to ConsumerAffairs.
The reality is that, in most cases, you won’t gain direct benefits. That’s one of the most common reasons people have for not pursuing extended coverage. Why throw money away, right?
And yet the auto extended-warranty market is growing: It’s estimated to grow from $34.93 billion to $37.26 billion in 2026.
So if extended warranties “aren’t worth the money,” why are more people investing in (and maintaining) them?
The Bureau of Labor Statistics reports a 43.6% repair-cost increase since 2019. It’s also estimated that the total average cost of owning and operating a car is about $12,000, with almost $4,000 of that being spent on variable costs. That comes to about $1,000 per month on a vehicle alone. It could be double if you’re a multi-car household.
That’s a pretty significant amount of money. With the rising cost of vehicle repairs, it could go up.
There are a few reasons for the gradual increase in repair costs:
So, while the percentage of warranties used is small, many drivers still weigh up the odds and choose to invest in peace of mind.
Here’s what we can say from experience: With a dataset drawn from over 1,400 contracts, we’ve observed that 73% of buyers choose the Best coverage option regardless of their income level. We’ve also seen a 50% add-on adoption, with an 18% cancel rate with add-ons and 27% rate without.
Numbers talk. In this case, they’re saying that many drivers want comprehensive coverage, and they don’t regret it.
You’ll see Toco, Endurance, and CarShield on several best-of lists, but the VSC company most suitable for you will depend on a few factors. These include your vehicle age and mileage (because some providers have caps), as well as your location, budget, and requirements.
Pushy phone calls and a reputation for aggressive sales tactics have made many vehicle owners hesitant to trust extended-warranty providers. The concerns are valid, and caution is important. There are scam companies out there, as well as deceptive (but legal) ones.
A great place to start looking is the Chaiz directory. All of the providers go through a verification process before being listed, and you’ll be able to assess fit based on a provider quality score calculated using customer reviews, transparency, and business reliability.
For quick reference, here’s a brief overview of four of the top-rated providers.
When it comes to selecting the best extended warranty company for you, transparency and fair pricing are key. Not all companies adhere to the same values, so being cautious is the smart move.
You also want to consider the company’s claims requirements—they should be transparent. If an offer requires upfront payment but is vague on the details, give it a miss. And don’t sweat the “today only” tactics. A legitimate company won’t use them.
Whether you purchase an extended warranty or not is a gamble. If your vehicle is no longer under factory warranty, you’re gambling on your ability to afford major repairs. If you do purchase a service contract, you run the risk of losing money by never claiming on it.
That’s why so many vehicle owners are asking themselves, Are extended warranties worth it?
There will be times when you’d be better off not rolling the dice. Here’s when it might not be for you:
An extended vehicle warranty is worth considering if you
If you do decide to invest in an extended car warranty, do it with care. Make sure you understand the fine print and what’s covered, as well as the terms and conditions attached. Evaluate add-ons, deductibles, and BBB ratings.
Live quotes in <10 seconds
Best-price guaranteed
5K+ customers trust us
