Extended Warranty for Used Cars Quick Tips
- A used car extended warranty might be worth it if the vehicle make and model has a poor reliability record.
- An extended warranty on used cars isn’t needed if the vehicle still has the manufacturer’s warranty.
- Consider used car warranties that exclude specific repairs rather than those that list what they will cover.
- Many people purchase extended warranties but never use the coverage.
If you’re shopping for a used car, you might consider getting an extended warranty. After all, a used car could be troublesome and have expensive repairs. An extended warranty might be a good way to avoid a hefty repair bill, or it could be an unnecessary expense.
Should you buy a used-car extended warranty? Read on as we explain a few situations when it might be a good idea and some instances when you should walk away.
- Should You Purchase an Extended Warranty?
- When to Consider a Used Car Extended Warranty
- When to Walk Away From an Extended Warranty
- Are Warranties Good for Used Cars?
Should You Purchase an Extended Warranty?
In general, we don’t recommend buying an extended warranty on a used car.
Warranty companies are in business to make money. Because they’ve usually done their homework, you’ll likely spend more on the extended warranty — $3,000 or more, in some cases — than any repair costs your car may accrue while the warranty is valid. Additionally, many people who purchase extended warranties never use them.
There are, however, some exceptions.
When to Consider a Used Car Extended Warranty
When weighing the pros and cons of an extended warranty, understand that your vehicle might not experience any mechanical trouble. However, having warranty coverage might be beneficial if the used car make and model is notoriously unreliable.
You can check the vehicle’s performance by researching car reliability ratings and checking out reviews, including on Autotrader. You can also get opinions from knowledgeable mechanics and drivers who have owned the same car.
If the car you want doesn’t have the best reliability record, here are two cases when to consider an extended warranty.
- It’s an exclusion warranty: Does the warranty cover everything except for items it expressly excludes? Exclusion warranties usually provide more comprehensive coverage and a lower chance for the warranty company to deny a claim. You should note that warranties do not cover routine maintenance or typical wear and tear items.
- The extended warranty cost seems reasonable. A warranty’s price shouldn’t be cost-prohibitive. You should not spend too much money to protect yourself against problems that may never come up. If the price is reasonable, consider what it will cover and weigh that against what costs you may face for any potential repairs.
[Editor’s Tip: Be sure to factor in the deductible cost when evaluating an extended warranty for your car. Years ago, my wife had an extended warranty on her Chevrolet Equinox. The only mechanical trouble it had was a faulty solenoid. While the warranty would cover the repair, the deductible was more than the cost of parts and labor. — Chris Hardesty, senior advice editor.]
What Are the Downsides of Purchasing an Extended Warranty?
- Added cost: A typical used car extended warranty will cost upward of $2,500 or more.
- Deductibles: Most third-party extended warranties require the owner to pay a deductible for covered repairs, with the warranty paying the difference. The deductible can run $50 to $300, sometimes more, depending on the vehicle. The larger the deductible, the less valuable the warranty.
- Difficult claims process: Some extended warranty providers have more streamlined claims processes than others. Some pay the repair shop directly, while others require you to pay for the repairs and file a claim with them. In other words, the process can be tedious and time-consuming.
- Coverage gaps: No extended warranty covers everything. Even if the extended warranty is “bumper-to-bumper,” there will be exclusions. We recommend only buying an extended warranty in which covered repairs and components are itemized in detail.
- Untapped coverage: After paying thousands for coverage, many owners never file a claim.
When to Walk Away From an Extended Warranty
There are several circumstances when you should walk away from an extended warranty on a used vehicle.
- The used vehicle is still under a manufacturer’s warranty. If the manufacturer’s warranty or certified pre-owned warranty still covers the car, we strongly caution against buying an extended warranty. You might not own the car when the factory warranty expires. So, you’ll have ample opportunity to buy an extended warranty as the factory warranty’s expiration date draws nearer. Some manufacturer warranties, like Hyundai’s, cover the repair or replacement of the vehicle’s powertrain for 10 years or 100,000 miles. However, that coverage includes select engine and transmission components and applies only to the original owner.
- The car gets good reviews. You should avoid a warranty if your car gets great scores for reliability. Once again, check reviews or ask knowledgeable mechanics and other drivers to learn your vehicle’s reliability record. There’s no point in spending money on an extended warranty when your car probably won’t have any issues.
- When it’s an inclusion warranty. We also suggest walking away from most inclusion warranties. As the name suggests, an inclusion warranty includes coverage of components only listed in the policy. This type of warranty isn’t very comprehensive, especially compared to exclusion warranties covering all parts with some exceptions. Read the policy very carefully to understand exactly which coverage you’ll be getting.
Warranty Company Reputation
Another significant point to consider when buying an extended warranty is to check the reputation of the company selling it. Some warranty companies have solid reputations and a nationwide presence. Unknown companies might not back up the warranty if your car develops a severe problem. We suggest you spend some time researching warranty companies to find one you’ll feel comfortable with if you plan on buying an extended warranty.
Are Warranties Good for Used Cars?
Used cars might have the remaining portion of the original new car warranty. Beyond that, used vehicles are typically sold “as is” and do not have warranty coverage.
There are instances when extended warranties for used cars may be valuable. However, the cost of coverage exceeds the benefit in most cases. Evaluate reliability reports for your vehicle, and steer away from a used car extended warranty if it has good reviews.
A comprehensive used car warranty can give you peace of mind if you worry about expensive repair bills. It is a financial decision that only you can make. You must decide if the additional cost is worth paying upfront or saving the money with the hope that you won’t need to use it for repairs.
Are Extended Warranties Worth It?
Generally, no. However, there are exceptions. If your used vehicle has a history of expensive repair issues, the deductible is low, the warranty inclusive, and the warranty cost reasonable, buying an extended warranty would make some sense. In this instance, though, the warranty must cover the most expensive components, drivetrain, air conditioning, and other costly items to repair or replace.
Can I Cancel My Extended Warranty?
Usually, yes, but it depends on the warranty provider. Many offer a process for canceling coverage; however, the time to find out what that process is is before laying out $2,500 or more. Moreover, financing the cost of that extended warranty coverage will make it virtually impossible to cancel.
Editor’s Note: This article has been updated since its initial publication.
Considering an extended warranty for 2014 BMW 750 I
Bought an extended warranty a few years ago, within a week a modulator of some type went, of course no electronics were covered,cost me $400. A mechanic friend once told me,”extended warranties cover about 500 parts on a vehicle,but there are about five thousand parts on the vehicle”.
To me, the extended warranty I purchased on the used vehicle I bought was nothing but a big waste of my hard earned money! I have been having issues and those issues have not been fixed. Now, the dealership I bought the warranty through is refusing to honor the warranty that I bought! When I called the warranty company they were zero help, which left me more frustrated than before! So now I am stuck paying for repairs out of my pocket that I can not afford. Next time I will save the money I was going to spend on the warranty! It has been nothing but a nightmare for me!
I got an extended warranty when I bought my 2002 Monte Carlo. This was several years ago. I got the extended warranty, because it was past mfg warranty. I did use it once when the Intake was leaking oil into the cooling system. I had a $200 deductible. The bill was $700, so they covered $500. The extended warranty was $3000, and added into the price of the car when I financed it. I don’t do extended warranties anymore. I got them on other cars before, and never had to use them. Save your money.
The pricing on the extended warranties is very negotiable. I bought my son a 2017 Honda Civic. I already secured the financing through a local credit union. They offered extended warranties also. The dealership offers extended warranty for 60months or 100k miles for $3000. I wasn’t going to pay that price for sure. As I sat there and thought about the whole deal I reached out to credit union and they offered a better warranty option 72 months for 120k for $1400.
I am buying a 2014 Honda CR-V with $61,000 miles on it. The seller insists on selling me an extended warranty for $2,387 6 year/80k. I don’t know if I should walk away or get the warranty!
The pricing on the extended warranties is very negotiable. I bought my son a 2017 Honda Civic. I already secured the financing through a local credit union. They offered extended warranties also. The dealership offers extended warranty for 60months or 100k miles for $3000. I wasn’t going to pay that price for sure. As I sat there and thought about the whole deal I reached out to credit union and they offered a better warranty option 72 months for 120k for $1400.
Any suggestions on an extended warranty for a 2016 Dodge Journey se? Also I was told that mopar charges a 105.00 inspection fee prior to selling you an extended warranty on a used car , does that sound right?
I guess I am one of the few who has a good story about purchasing an extended warranty on a used car.
This is such a dumb article even if the car is under factory warranty, you should invest a percentage of the value of the car to protect it. Even the most reliable cars break down. Have you seen a dealership without a service department? No, because cars break down!
Of course cars break down. But, not all cars break down within the covered insurance period. And not to the extent that the expense of the coverage makes it worthwhile to purchase the coverage. If they did, they wouldn’t offer the insurance. They are in it to make a profit. Would you pay $3,000 for a premium to cover a $500 repair? Or pay a $3,000 warranty premium for a car you paid $7,000 for? And then take a chance on their not honoring that particular breakdown? It may help you sleep at night, but that much of a premium just does not seem like good business sense.
I bought a used Zafira last week. 49000 miles. My Ford Warranty arrived today, £500! It was never discussed at point of sale, and I assume it was added to the finance as ‘fee’ . I certainly would not have paid extra for recovery as I already have it, going to take it up with the dealership, but is this reasonable to take out?
We used nationalrepairsolutions.com for our commercial vehicles at the shop. Been using them for about 5 years now and they paid all the claims we submitted. I also use them for my personal vehicles too.
The dealer told me to use Nationalrepairsolutions.com because they are a broker for all the warranty admins. So you can almost pick out the coverage and price range. Used for 3 years now paid a couple of claims plus a tranny.
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Your experiences seem to have been better than others, because National Repair Solutions appears to have a D rating with the BBB.
from someone that has bad luck with cars.. get the extended warranty lol i use nationalrepairsolutions.com they have a lot of different options and i get more coverage at a lower price and a low deductible
Extended warranty companies are still in business because they take in more money (your premiums) than they pay out (your repair costs). In other words, more people pay for warranties and do not use them than those who do make claims
same as insurance companies, do you have car insurance?
I bought a used 2012 Nissan Altima SL at a Nissan dealership. I was explained that it was a 7 year 100k mile warranty on the car and it would cost me an extra 1200 for it. I agreed being that it was already 69k miles on the vehicle and that I had got a similar warranty through Carmax with my previous vehicle that was great. Come to find out the warranty was exactly for only one year because they started the warranty at the sell for the previous owner new car purchase. Don’t buy warranty from dealership. You would be better buying a second warranty to help cover any cost.
I purchased a warranty on my used 2008 Mazda 3 purchase and I left dealer feeling I got ripped off until about 3 months later my a/c died. The warranty paid for itself when it covered the entire cost of repair including new compressor – I now feel much better that I was given the warranty option.
What is the name of your warranty company?
I bought a Mercedes SL500 that was 5 years old, from CarMax – bought the 6 yr/100K mile warranty. Never had an issue with something being denied and the first trip to the shop was over $3K, that was more than the warranty itself cost. All in I think my warranty coverage paid out over $15,000 – they lost money on this one. Now looking for another higher end used car and will definitely take a warranty into consideration.
Which warranty company did you use? Thanks.
Hello Suzanne, what’s the name of the warranty company you went with?
i just purchased a 2010 MB S550. I do want to purchase an extended warranty as the dealership did not offer one to me at the time of purchase. How can I find a reliable warranty that will cover me nationally?
I would. Have you seen how much parts and service are for an S class??
I would consider asking your local credit union or whoever you have the loan with if you have one
Carmax’s “MaxCare” extended and transferable warranties are also great — customer service is superior, we have taken our 2010 Honda Odyssey to dealer for covered repairs (weak door mounts on rear sliders – $800 twice) and never has a claim been denied. It has paid for itself and we still have 2 years and 30,000 miles remaining! This is warranty which Jeremy Clarkson on Top Gear recommends while referring to always-under-repair Land Rovers.
Hi Guys , I have one question .
We just did this and they told us that yes we do still have to pay it. Because had something happened it would have been paid for.
Hi Guys , I have one question .
most warranties can be prorated so you should be able to get some of the money back.
An extended warranty may be a danger to a customer’s if they are not fully aware about the actually facts like its terms and conditions. If that describes your situation, and you plan to keep your vehicle longer than the length of the original manufacturer’s warranty, an extended service contract may be right for you as www. warrantech.com had been taken a responsibility of all kinds of manufacturing plans.
Extended Warranty is a good product as it serves our much needed demand for paying repair cost when our manufacturer’s warranty ends.Believe me repairs can dig deep into your pocket and it can create a lot of stress.For me extended warranty has helped me to breathe easier.I should give Warrantech credit for this,their customer oriented plans and customer service is out world.
You are better off opening a 2nd savings account and putting the amount you would spend on the warranty in that account, if you don’t spend the money, then fine.
My experience with extended warranties is this, they WILL find a way to deny your claim, period.
There is ALWAYS a technicality you didn’t meet and you have just lost your money.
I would generally agree but with the exception of the Ford ESP. We have been covered on two different vehicles for well over 5000.00 and never had any resistance.
I ran into this situation with my used Acura RL.
I am going through that exact same thing right now! What a waste of money the warranty was!