should you buy extended warranty on new car

Car Warranty

Benefits of Buying an Extended Car Warranty on a New Car

If you’re in the market for a brand-new vehicle, chances are you’ve heard the term ‘extended warranty’ here and there. But if your car comes with a factory warranty included, there’s no need to buy one, right? Well, not necessarily.

While it’s true that manufacturers cover almost all new vehicles, this protection may not be as comprehensive as you’d like it to be. Some manufacturers cover almost everything, while others may only look out for your powertrain. On top of that, the coverage period is often a lot shorter and expires quickly. The average manufacturer warranty only lasts around 3 years or 36,000 miles (whichever comes first). Once you’ve hit those limits, you’re responsible for all breakdown costs.

Of course, you could wait until your factory warranty is void before you invest in an extended warranty, also known as a vehicle service contract, but that may not be the best idea. So, should you buy an extended warranty on your new car? Let’s take a look at your options.

What Are the Benefits of Buying an Extended Warranty on a New Car?

Your factory warranty could be the best in the world, but one thing’s for sure: it won’t last forever. After that, your only option is to take out an extended service contract, which can either be done via your dealership or a third-party provider. If you choose not to take up coverage, you’ll be liable for the cost of any expensive repairs your car might need in the future.

While you may not think there’s any reason to purchase an extended warranty while the manufacturer covers you, there are some key benefits from doing so:

Complete Peace of Mind

If your extended warranty contract is set to begin the second your factory warranty expires, you can drive safe, knowing you’ll never get caught without coverage. No checking your mileage or keeping a mental note of when you bought your car, just uninterrupted peace of mind. And that’s not something you can put a price on.

Total Car Care

Factory warranty not as comprehensive as you expected? An extended service contract can remedy that. For example, if your manufacturer only offers engine component coverage, you can invest in an extended warranty that misses out on those parts and covers everything else. Third-party providers are incredibly flexible when it comes to things like level of protection, additional extras, and overall cost.

Tailored Coverage

Speaking of which, a third-party extended warranty allows you to take out the coverage that suits your specific needs. With a factory warranty, you get what you’re given, and with vehicle service contracts offered by dealerships, you generally only get the choice of a few select packages.

However, if you opt for a third-party provider, you can decide on a specific budget and get affordable coverage that meets your needs. You can also add on extras that manufacturers rarely include, like roadside assistance and trip-interruption costs. Some third-party providers even have these as standard, making them the all-around better-value option.

Keep Your Vehicle in Tip-top Condition

The best third-party extended warranty policies also include regular maintenance, such as tire rotations and oil changes. These keep your vehicle running like new, meaning less likelihood of breaking down for longer. On top of that, having a well-maintained car is required for a successful warranty claim and also gives your vehicle a higher value should you come to sell it later down the line.

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What Are the Risks of Not Buying an Extended Warranty on a New Car?

On the flip side are the risks of not taking out an extended warranty on your new car. Some are more obvious than others:

You Pay Thousands on a Car Repair

Imagine you forget that your factory warranty is coming to an end, and you haven’t lined up extended coverage to start as soon as it does. It’s the law of the universe that bad things happen at the worst possible time, and you can bet that your car will break down the moment you aren’t protected. That means any roadside recovery and repair bills will come straight out of your wallet when they don’t have to. With one in three American drivers unable to front the cost for emergency repairs, extended warranties are a total lifesaver for millions of people across the country.

A false sense of security

You may assume your factory warranty includes both bumper-to-bumper and powertrain coverage, but you could be in for a nasty shock when the worst happens. Check your owner’s manual for a full rundown of what your manufacturer’s willing to protect, and if it isn’t up to your expectations, get on the line to a warranty provider as soon as possible.

The hidden costs of car ownership

The cost of owning a vehicle is much higher than you’d expect. According to the AAA, when you add regular maintenance and repairs into the mix, the average American spends $9,282 on their car – and that number goes up almost every year. An extended warranty intends to save you money, and with every aspect of your vehicle covered, you should be able to do that easily.

New Car Extended Warranty FAQs

What’s the Difference Between a Factory Warranty and an Extended Warranty?

A factory warranty is provided by your manufacturer and covers your car from purchase for a specified period or miles. An extended warranty is intended for sale once your manufacturer coverage has expired, but it can also be purchased in conjunction if required.

What Does an Extended Warranty Cover that My Factory Warranty Might Not?

Some manufacturers may only cover your engine, leaving everything else between your bumpers up to you. If you’d like to protect what your manufacturer won’t, an extended warranty is the solution. Just tell a third-party provider what you’re missing, and they should be able to put together a bespoke package for you.

Should I buy an extended warranty on a new car?

It’s usually a good idea. Whether it runs alongside your manufacturer warranty to cover specific parts or kicks in once the original agreement expires, having an extended warranty on your new car gives you comprehensive protection for longer.

Is it better to get an extended warranty from my dealership or a third party?

Dealerships can often be restrictive with what they offer and generally charge a lot more for much less protection. On the other hand, third parties can be much more accommodating to your specific situation and needs.

They also have the incentive to be much better valued, adding extra benefits to policies and giving you the freedom to have your vehicle repaired at a wider choice of auto shops.

Total Protection for Total Peace of Mind

Making sure you’re always protected from breakdowns is only the smart thing to do. Get to grips with your factory warranty and use an extended warranty to plug any holes it might have. If you’re happy with the level of coverage offered by a manufacturer, make sure you have an extended warranty in place to pick up as soon as your factory warranty expires.

In any case, third-party extended warranties are likely to be your best bet. Shop around for great-value coverage and work with the provider to tailor a policy that works for you. It’s always better to be safe than sorry, and when you know your wallet won’t be impacted by whatever might happen, you can drive in complete confidence.


JD Power:

The AAA:

The AAA:

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