The length of the warranty varies by manufacturer, but many offer bumper-to-bumper warranties for three years or 36,000 miles, whichever comes first. Powertrain warranties may last for up to 60 months or 60,000 miles.
Some warranty plans include extras, such as towing, roadside assistance or trip interruption protection. Many extended warranty plans require you to pay a deductible toward repairs, while some will pay every dollar of the repair bill.
Extended car warranty programs have different ways of covering repairs. Some require you to get pre-approved before any repairs are done and will reimburse you for the cost. Others work directly with the shop and pay them directly. Be sure to read the fine print in your contract before you approve any work you expect the warranty company to cover.
An inclusionary extended car warranty covers parts specifically listed in the contract, and not any parts that are not specified. Exclusionary vehicle service contracts cover everything except items listed explicitly as non-covered parts.
Typically, extended car warranty programs offered by automakers require you to visit one of their franchised new car dealerships to get covered service. Third-party providers may have you go to dealerships, networks of approved shops or any ASE-certified repair facility.
Buying a new or used car involves lots of decisions. What color do you want? How will you finance your purchase? Should you buy an extended warranty? An extended warranty can give you peace of mind after buying a new or used car, but these agreements have their limits and aren't always worth the cost. Learn how extended warranties work, when you may want one and other ways to cover the cost of car repairs.
New vehicles are covered by the manufacturer's warranty (or factory warranty) for a certain number of years or miles. Factory warranties are free and usually include both bumper-to-bumper and powertrain warranties.
Powertrain warranties cover the parts that put the vehicle in motion, including the engine, transmission, driveshaft, axles and differential. The average powertrain warranty lasts five years or 60,000 miles, whichever comes first.
You can buy extended warranties from auto dealers, vehicle manufacturers and independent companies. Dealers often suggest purchasing an extended warranty when you buy a car, but you can buy one at any time.
The cost of extended warranties varies depending on coverage, warranty length, the vehicle's predicted reliability and other factors. Warranty companies aren't regulated the way insurance companies are, so there are no restrictions on what they can charge. A recent survey reports the median price of an extended warranty was $2,458, but prices ranged from $1,615 to $3,208.
It's generally best not to buy an extended warranty at the time you buy a car, since you won't use it for several years. Wait until the manufacturer's warranty is nearing expiration or the deadline to purchase coverage is approaching.
Similar to an extended warranty, car repair insurance covers mechanical breakdowns and repairs that car insurance doesn't pay for. Car repair insurance is usually limited to newer cars, so it's not an option for everyone. However, it generally costs less than an extended warranty.
Purchasing a new car with a long factory warranty can help safeguard against expensive repairs. Hyundai, Kia and Mitsubishi vehicles all boast bumper-to-bumper warranties of five years or 60,000 miles and powertrain warranties of 10 years or 100,000 miles, whichever comes first.
Rather than purchase an extended warranty, your money might be better spent paying a bit more for a car whose predicted reliability is better than average. (Consumer Reports and J.D. Power are good sources of reliability data.) Then follow manufacturer recommendations for regular maintenance to keep your car in good shape.
Extended car warranty cost information is not always easy to find. Many extended warranty companies can be unclear about pricing, especially those that deal exclusively through agents and dealerships. Even companies that are upfront about pricing do not have fixed contract costs. Extended car warranty costs are determined based on the vehicle that is covered.
An extended car warranty typically costs between $2,000 and $5,000. This range varies widely because numerous factors determine how much the specific cost you will pay. Along with these factors, the information below explains the particular car warranty costs you can expect with an extended warranty.
Warranty costs we obtained ranged from under $1,000 to over $6,000. The best extended car warranties from Endurance and CARCHEX were among the most expensive. Each plan had a $100 deductible except for autopom!, which required no money for a covered repair.
To be profitable, extended warranty companies must charge a large enough amount to cover all car repairs with money left over. To achieve this, most providers charge a monthly premium worth at least two times the amount of likely mechanical problems or repairs.
While this might seem unfair to drivers, it comes through careful calculation of the risks of coverage. To calculate the optimize extended car warranty prices, actuaries assess consumer data to find the most frequent repairs, complaints for certain vehicles, average labor costs, and how much consumers will pay for coverage. Factors used to calculate the cost of extended warranty coverage include:
While the top aftermarket service contract companies offer a variety of plans, their coverage levels can be roughly split into two categories: bumper-to-bumper plans and powertrain plans. Bumper-to-bumper extended warranties, generally more expensive, are exclusionary contracts covering most vehicle parts.
On the other hand, extended powertrain warranties cover only the essentials needed to make a vehicle run and are the most expensive to repair. Powertrain extended warranties are a lower-cost option that is often an excellent choice for used cars. Comprehensive inclusionary plans and powertrain plus plans are mid-range coverage tiers in the middle of these primary options. Below are the prices for both of the main types of warranty plans.
The cost of an extended warranty from used car warranty companies increases as a vehicle has higher mileage and age. The reason for this is simple, even though the bumper-to-bumper plan has a much more comprehensive level of coverage, it is still less costly if the vehicle has less age and mileage because there is a lower chance of major repairs for the newer vehicle.
You can get an extended warranty for cars over 100k miles from nearly all the top aftermarket providers. Generally, the coverage for high mileage car warranties is focused on the powertrain and costs more. While this means you will likely pay over $500 per year for coverage, many providers have affordable powertrain plans for cars with high mileage, which can go a long way in protecting you from paying for the most costly repairs as your vehicle ages.
Below are two examples of what an extended car warranty costs with CarShield. Note that plans are month-to-month, so you would pay as long as you have a plan. Compared to contracts from other companies, this can become more expensive in the long run.
In addition, the article reviews how contracts are typically priced, and list sample quotes that our research team gathered while evaluating the best extended car warranty companies. The best way to determine how much an extended car warranty will cost you is to get free, personalized quotes from multiple companies. You can start comparing quotes from our top recommended providers below.
When shopping for extended warranties, comparing personalized quotes from multiple companies is always a good idea. Finding cost information can be a hassle, but the process can move along smoothly if you keep the following tips in mind:
The period of an extended car warranty, or how long you are covered, is a significant factor in estimating the cost of an extended car warranty. Generally, the longer you are covered, the more the coverage will cost. Conversely, while more extended coverage periods cost more overall, they also tend to be cheaper per month of coverage. When inquiring about the costs for various coverage periods, many drivers are interested in how much car warranties cost for shorter timeframes. Below are our estimates of the cost of a car warranty for various periods:
To make a profit, warranty companies must make more from warranty payments than they pay in operating costs, which includes the costs of sales and marketing, corporate administration, and paying claims.
In order to do this, most warranty companies charge at least two times more money than they likely amount they will pay for in repairs. Other methods that extended warranty companies may use to make a profit include using aggressive marketing to generate more sales than claims that must be paid out and sourcing parts and labor for lower-than-market prices.
Having the peace of mind that an extended warranty brings is a huge benefit of buying an extended warranty, but it can be a double-edged sword. Many customers never end up using their warranty, so it can be worth it to think about if you actually need an extended warranty for your vehicle.
In an effort to provide accurate and unbiased information to consumers, our expert review team collects data from dozens of extended auto warranty companies to formulate rankings of the best providers. Companies receive a score in each of the following categories, as well as an overall weighted score out of 5.0 stars.
I have gone over a decade without buying an extended warranty. Along the way, I learned a thing or two about the practice which seems to dominate the time and energies of associates and salespeople at many retail locations. The extended warranty market is big business. In fact, companies often outsource extended warranties to larger insurance companies. These companies then stuff these policies with limitations and conditions designed to make it more difficult to actually make a successful claim. 781b155fdc