Is an extended car warranty worth it in 2021?

• An extended vehicle warranty will give you peace of mind on the road after the factory warranty has expired.
• The price of an extended warranty can sometimes exceed direct payment of repair bills.
• Choose carefully between an extended vehicle manufacturer's warranty and a third-party supplier.

Extended vehicle warranties can be a lifesaver in the event of a mechanical breakdown, but they can also add several thousand dollars to the cost of owning a car. After all, is an extended car warranty worth it?

In this article, we'll look at the pros and cons of an extended car warranty, break down typical costs, and give you guidance on where to best buy an extended car warranty.

Click below to start comparing free, personalized rates from our top recommended providers.

The Best Extended Warranty Companies We've looked at the best extended warranty providers for cars, and here are our top picks.

Best Overall	Best for Used Cars	Most affordable
Endurance	CARCHEX	CarShield
Get a quote	Get a quote	Get a quote
(877) 374-1840	(866) 254-0205	(800) 563-2761

What is an extended car warranty?

An extended vehicle warranty or a vehicle service contract promises to pay certain costs for vehicle repairs after the factory warranty has expired. Unlike auto insurance, which covers you in the event of a collision, an extended vehicle warranty protects against mechanical failure or defects in material or workmanship by the manufacturer.

There are many types of vehicle maintenance contracts, the most common of which are bumper to bumper warranties and powertrain warranties.

Bumper to bumper coating covers most parts of the vehicle in the event of a mechanical failure. They are more extensive than the transmission warranty and are often more expensive. Powertrain warranties usually only cover the parts of your vehicle that make it move, including the engine, transmission, drive axles, and related parts. They usually last longer than the inter-bumper warranty but cover far fewer components.

Many warranty companies also offer extended transmission warranties that include coverage for other major systems such as air conditioning and brakes.

Is an extended car warranty worth it?

Many drivers find that an extended car warranty is worth it, if only for the peace of mind they bring. With an extended car warranty, you don't have to worry about whether you can afford mechanical repairs after the factory warranty expires. In fact, according to a survey conducted by Pegasystems Inc., 60 percent of extended warranty owners reported that they used their coverage last year.

However, an extended warranty may not cost every driver. Below we have compiled a list of pros and cons that you should consider before deciding to purchase insurance coverage.

Car Warranty Pros

Plus: An extended car warranty can help you finance repairs. Repair costs can add up quickly, especially if an expensive component such as a head gasket or fuel pump fails. Manufacturers include a factory warranty that protects against these costs for the first few years of your vehicle's life, but after it expires, you pay for repairs yourself. Extended warranty plans pay for parts and labor for covered repairs, and you are only responsible for insurance premiums and deductibles. You can also save money in the long run if you use the extended warranty multiple times or only do major repairs.

Pro: you can choose the most suitable coverage . Manufacturers sometimes have multiple extended warranty plans to choose from, but third-party vendors almost always give you plenty of options. Our two top recommended providers, Endurance and CARCHEX, offer drivers five different levels of coverage. They range from basic powertrain plans to full bumper to bumper warranties so you can be sure you're only paying for the coverage you need.

Pro: You will receive additional benefits. With virtually every extended vehicle warranty plan, you get additional benefits along with the coverage you choose. Standard benefits include 24/7 roadside assistance, trip interruption coverage, and car rental insurance. Some providers, like Endurance, are working hard to provide benefits such as free tire changes, key fob replacements, entertainment vouchers, and more.

Car Warranty Cons

Cons: An extended warranty might not be the most economical option. Extended vehicle warranties are a great choice if you think you'll be using them. Otherwise, you may need to pay for coverage you don't need. You will need to take into account the reliability of your vehicle, as well as your ability to pay for repairs right away, to determine if an extended warranty is the best option for you.

Cons: Sometimes coverage options are limited. In some cases, especially with some manufacturers, you are limited to one or two coverage options and there is no flexibility in terms of deductible amounts. If you're stuck in a situation where you have too few options, you may want to skip the extended coverage or opt for a third-party plan.

Con: You will have to wait for lighting. Most extended warranty plans have a waiting period of 30 days and 1,000 miles before coverage begins. This allows the service provider to verify that there are no problems with your vehicle. Sometimes your plan's benefits are still available during this period, but often you will also have to wait to use them.

Extended warranty and repair costs at no additional cost

As we mentioned, an extended car warranty can put money back in your pocket when it comes to costly repairs. Now let's see how much an extended warranty can cost you and what factors affect pricing.

What is a good price for an extended warranty?

Based on our research, a good price for an extended warranty is around $1,700 to $3,000. This is a wide range as the cost of the warranty will depend on many factors, including which plan you purchase and the age and model of your vehicle.

There is no single price for an extended warranty, but we will take a closer look at the individual factors that will affect the value of your warranty:

• Guarantee period. Longer restrictions will increase overall costs.
• Location. If you live in a high traffic area, you may pay more for coverage.
• Franchise . Generally, the higher your deductible, the lower your premium will be, and vice versa.
• Warranty Plan . As mentioned, inter-bumper warranties will be more expensive as they are more comprehensive.
• Vehicle age . Older vehicles with high mileage are more prone to mechanical failures, so repairs are often more expensive.
• Vehicle type. Expensive cars need costly repairs, which is reflected in warranty costs. If you own a sports or luxury car, you will likely pay more for insurance coverage.

What is the average repair cost?

Now that you know how much a warranty can cost you, let's see how much you can pay out of pocket for repairs without a car service contract. We took a look at five of the most popular auto brands in the US and compiled a table of their average annual repair costs according to RepairPal.

Here's the same data for popular luxury cars, according to RepairPal.

These numbers are brand averages, so they may vary by car model. Also, repair costs are likely to be higher for older or high mileage vehicles. However, even with these averages, it's easier to see if an extended car warranty is worth it.

For example, according to our research, a five-year full warranty on a new Toyota Camry can cost you between $1,700 and $2,500. If you skip the extended coverage and pay out of pocket for Toyota repairs, you could end up paying around $2,200 over five years.

You can determine if your car is worth an extended warranty by looking at the average repair cost on RepairPal and comparing it to several extended warranty companies.

Where to buy an extended warranty?

Figuring out your ideal extended warranty provider is another piece of the puzzle. In general, you have two options: your vehicle's manufacturer and a third-party supplier.

Extended Manufacturer's Warranty

Generally, you must purchase an extended warranty from the manufacturer at the time of vehicle purchase or before the factory warranty expires. Unfortunately, this doesn't give you much time to decide if you really need longer coverage. An extended manufacturer's warranty is typically around 100,000 miles, which isn't very long compared to third-party contracts.

In most cases, manufacturers also force you to return to the dealership to complete a covered repair. On the one hand, you will definitely have access to factory-trained technicians and genuine parts. On the other hand, you are limited in where you can go for help.

If your vehicle is still covered by the original factory warranty, call your local dealership to explore plan options and get a quote. Otherwise, you may have to seek coverage from an aftermarket warranty provider.

Third Party Extended Warranties

Third party warranty providers tend to offer more flexibility than manufacturers in terms of cost, repair facility availability, and coverage options. Reputable extended warranties can offer up to 15 years and 250,000 miles, depending on the supplier. Drivers who plan to stay with their car for long distances will definitely benefit from such long-term insurance coverage.

With a third party provider, you can also choose from several coverage plans that allow you to customize additional options depending on the level of protection you need. In addition, you can usually take your vehicle to thousands of authorized repair shops throughout the US, including dealerships and family stores.

If you choose the 3rd party vendor path, you can usually get a free quote online.

Our Top Recommendations for Extended Vehicle Warranties

Is an extended car warranty worth it? Yes, if you choose the right provider and know that you need extra protection. When weighing options, it is recommended to receive proposals from several companies. We've highlighted a few of our top providers below to get you started.

Endurance: Best overall

We rated Endurance as the best provider overall because it sells and administers all plans in-house rather than brokering plans that are administered through other companies. This means that intermediaries are not involved in the processing of proposals and requirements, which ensures maximum efficiency.

Endurance has six different coverage plans to choose from that can last up to 15 years and over 200,000 miles. It also offers the best benefit package in the industry, which you can read about in our full Endurance Warranty Review.

To get a free quote and see if your vehicle's Endurance warranty is worth it, click below.

CARCHEX: The Best for Used Cars

If you are looking to purchase insurance coverage for an older, high mileage vehicle, we recommend looking into CARCHEX. This supplier has a special plan for high mileage vehicles and is limited to 10 years or 250,000 miles. In total, CARCHEX offers five coverage plans that include additional services including emergency roadside assistance, car rental reimbursement, free towing, and trip interruption coverage. Read a head-to-head comparison of CARCHEX and Endurance in our Endurance and CARCHEX review.

You can get a free personalized CARCHEX quote by clicking below.