Is an Extended Warranty Worth It?

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While extended warranties are great investments for many vehicles, there are some instances where an extended warranty may not be a great fit.

By Gary Smith (Contributing Writer) | Published on February 22nd, 2021 | Last Updated on
By Gary Smith (Contributing Writer)
Published on February 22nd, 2021. Last Updated on .

Car ownership has its ups and downs. While we could list a thousand benefits to owning a vehicle, today, we want to focus on the things that aren’t so great. More specifically, car repair costs. Repairing your vehicle can cost hundreds to thousands of dollars, depending on what needs to be repaired. One of the best ways to keep your out-of-pocket costs down on car repair bills is with an extended warranty. Today, we will look at what an extended warranty is, what it costs, and if it's worth having on your vehicle.

New Vehicle Warranties

When purchasing a new vehicle from the dealership, you will usually get a factory warranty attached to the car. This warranty protects against defects in the manufacturing and craftsmanship of the vehicle. Manufacturer’s warranties usually cover just about every component on your vehicle for an average of about 3 years or 36,000 miles. Depending on your vehicle manufacturer’s warranty, this may be more or less.

What Are Extended Warranties?

Extended warranties are protection plans that cover your car's most vital components after your factory warranty has expired. Extended warranties can be purchased from dealerships or third-party companies and give you years of additional protection. Most companies are going to give you 2-6 choices of coverage ranging from simple powertrain coverage which covers your engine, transmission, and drivetrain, up to full comprehensive coverage that will protect just about every component on your vehicle. They will usually come with convenient services such as roadside assistance, trip-interruption, car rental, and many more. Extended warranty benefits and features will vary from company to company and vehicle to vehicle.

When An Extended Warranty Would Not Be A Wise Investment

While extended warranties are great investments for many vehicles, there are some instances where an extended warranty may not be a wise investment. The point of an extended warranty is to pay less for the warranty than what you would expect to pay for your total repair bills during the warranty term. Doing research on the cost of ownership of your vehicle will give you great insight into how much you can expect to spend on your car over the years. If your vehicle performs well past the factory warranty, purchasing an extended warranty may not be in your best interest.

How Much Do Average Repairs Cost?

Auto repair costs can cost anywhere from under a hundred dollars to a few thousands of dollars, depending on what needs to be repaired. Most automotive parts fail without warning, which could put you in a financial bind if you do not have the funds. Let's take a closer look at what average auto repairs cost to give you a better idea of whether or not an extended warranty will be worth it for you.

Repair Part Average Cost*

A/C Compressor

$867-$1,018

Front Control Arms

$603-$722

Alternator

$591-$680

Cooling Fan Motor

$358-$533

Stabilizer Links & Bushings

$93-$147

Blower Motor

$260-$274

How Much Does An Extended Warranty Cost?

The cost of an extended warranty is not going to be a one-size-fits-all type of thing. Extended warranty companies are going to need to get a few different criteria from you to get an accurate quote. Some of the things that extended warranty companies take into consideration are the type of coverage level you choose, what type of vehicle you have, and the number of miles you currently have on your car. These factors will allow the representative to build out your specific warranty quote that will be a perfect fit for your vehicle. The level of coverage you choose will have the most influence on the cost as they are priced accordingly.

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How Much Money Could I Save With An Extended Warranty?

The amount of money you can save with an extended warranty will be dependent on what you are paying for your warranty and how much your repair bills will be. In extreme cases of engine failure or failure of high-tech systems that are covered, you could save thousands of dollars when compared to your overall cost of the extended warranty. This is why it is very important to shop smartly to get an extended warranty that is going to cost less than your expected repair costs.

Are Extended Car Warranties Worth It?

So now that we have looked at what an extended warranty is, what it costs, and how much money you could save with one, it is time to decide whether or not it is worth it. In most cases, it is worth having an extended warranty as you never know what may happen to your vehicle. If you can afford an extended warranty and do not have a good amount of savings to put toward unexpected repairs, then having this protection could save you from going into debt. Whether or not an extended warranty is going to be worth it for you will depend on your warranty cost, the reliability of your vehicle, and your financial situation.

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