Should You Buy Extended Car Warranty?

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Today’s new cars are rolling showcases of technology, packed with advanced drivetrains and connected infotainment features that can be expensive to repair or replace. The peace of mind that comes with an extended car warranty can help offset the financial risk of those costly components breaking down. But warranties come at a premium, with some costing thousands of dollars. So, should you buy one? That’s a question that requires careful consideration of your risk tolerance, financial comfort level and the vehicle you’re buying.

Some extended warranties only cover major repairs, while others offer more comprehensive coverage, such as roadside assistance and rental car coverage. Regardless of what type of plan you choose, read the fine print carefully to make sure you understand its stipulations. For example, you may be required to use only specific repair shops or a certain brand of parts, and some plans include deductibles that you’ll be responsible for paying in the event of a breakdown.

The term of an extended warranty also matters. Some plans run for a fixed length of time, such as two years, while others expire after the car has reached a certain mileage limit. You’ll also want to consider whether the warranty provider is reputable and has a good track record for paying claims. You can find out more about a warranty provider by reading reviews from other customers and looking up its financial health.

Another key factor to consider is whether an extended warranty adds value to your car when it’s time to sell or trade it in. Some warranties are transferable, but many are not, which can significantly reduce the car’s resale or trade-in value.

Finally, be wary of aggressive telemarketers pitching extended warranties. The Ohio Attorney General’s office has been working to crack down on robocalls that connect people to scam extended warranty companies, but the problem persists. Check your phone’s call history to see if you have any suspicious calls, and don’t give out your number to anyone who pitches an extended warranty.

An extended warranty might be worth the money if you’re planning to keep your vehicle for several years and can’t afford to pay for unexpected repairs out of pocket. However, you should carefully weigh the costs and benefits, especially if your current car has a solid reliability track record.

Candace Baker is a staff writer at WalletHub, where she covers car insurance and finance topics. Before joining WalletHub, she wrote about automobiles and consumer electronics for a variety of outlets, including The Washington Post and Fortune. She earned her bachelor’s degree from The University of Texas at Austin.

WalletHub’s guide to buy extended car warranty can help you weigh the pros and cons of an auto service contract. Find out what repairs and services are covered, how much an extended car warranty costs, and who backs the policy. We’ll also give you tips to get the best deal and avoid hidden fees.

The best time to purchase an extended auto warranty is at the dealership, when you can often negotiate it into your car’s price or trade-in value. But you can also get them from independent dealers, online retailers and other sellers.

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