The Best Extended Warranties

When testing out and reviewing extended warranty providers, we paid attention to a handful of key factors.

• Eligibility: We considered who companies cater to in terms of state, vehicle makes, model years, mileage, and pre-existing conditions.
• Buying process: We like companies that allow customers to get quotes and buy their coverage both online and over the phone. We also prefer companies that don’t require pre-inspections.
• Coverage: The more coverage, the better. In particular, we prefer companies that offer 24/7 roadside assistance and rental car coverage while your car is being repaired under a covered claim.
• Claims process: We like companies with a wide network of repair facilities across the country. We also prefer companies that pay the repair shop directly and offer customers a deductible per visit, not per repair. Ideally, deductibles cost around $100 and are not proportional to the repair cost.
• Pricing: The average minimum monthly cost of extended warranties is $331, while the average annual cost is $5,195. Obviously, we prioritize companies close to or below these averages, with money-back guarantees and no cancellation fees.
• Customer service: Companies should have customer service, including claim filing, both online and over the phone.
• Third-party ratings: We consider third-party ratings from the Better Business Bureau (BBB) and Trustpilot. The BBB rating should be a B or higher, while the BBB customer rating should be four stars or higher. The same goes for the Trustpilot score. Additionally, we prefer companies that are BBB-accredited.
• Mobile app: Lastly, we consider whether a company has a mobile app and we prefer mobile apps with at least three stars on the Apple and Google Play stores.

Extended car warranties help cover car repair costs after your original manufacturer warranty expires. You can buy an extended warranty from a dealership, manufacturer, or independent warranty company. Many extended warranties come with additional perks, like rental car reimbursement and roadside assistance.

Paying for extended car warranties works much like paying for auto insurance. You choose a deductible and pay a monthly premium to keep your warranty active — the higher your deductible, the lower your premiums will be. You can also pay annually or with a one-time lump sum.

Unlike the original equipment manufacturer warranty, an extended warranty is an additional contract that dealers and manufacturers do not include in the original price of your vehicle. Extended warranties either cover the cost of repairs directly with a mechanic or reimburse you for any covered repairs that you get done on your own.

Extended warranties are active for a set period of time, usually between one and seven years.

Pros and Cons

Original Equipment Manufacturers (OEMs)

You can buy extended warranties from your original manufacturer, like Toyota, Ford, or Dodge. OEM extended warranties extend the length of coverage and allotted mileage of your existing warranty.

Powertrain Warranty

A powertrain warranty covers your engine, transmission, and drive axles. If any covered components of your car fail due to a material or design defect, your provider will cover some or all of the costs.

Bumper-to-Bumper

Otherwise known as limited warranties, bumper-to-bumper warranties cover most parts and systems of your vehicle, including safety equipment, electrical parts, the braking system, engine, and more.

Definition

Any warranty that isn’t an original manufacturer warranty is considered an aftermarket or third-party warranty, which could be provided by a dealership or independent warranty company.

Some third-party warranties offer more coverage than OEMs, but they may come with less coverage — it depends on your particular plan and your coverage details. One downside to aftermarket warranties is that they do not guarantee OEM part replacement, and the parts you do have access to are often cheaper quality than the OEM parts.⁵

Types of Aftermarket Auto Warranties

Aftermarket auto warranties usually come in different tiers that vary in cost and level of coverage. Here’s an example of what the different tiers from a provider might look like:

How Do Aftermarket Auto Warranties Work?

Aftermarket warranties may provide fewer coverage options than a manufacturer warranty, but they work the same way your original warranty would. Your plan may include select shops or mechanics where you can get your car fixed, and you may not always be able to get OEM parts as replacements.

Most aftermarket warranties finance repairs or repairs through reimbursements. You’ll pay for the repairs out of pocket, file a claim, and get reimbursed (which could take months). You also have to pay your deductible first, which is often hefty.

Do I Need an Aftermarket Auto Warranty?

Here are a few situations in which you would need an aftermarket warranty:

• You’re not already under a warranty.
• You’re concerned about your vehicle’s reliability.
• You have a separate budget for maintenance, as most extended warranties don’t cover maintenance.

Coverage options and add-ons differ from provider to provider, so ask about what your provider does or does not include in your plan. However, most extended car warranties cover the following repairs and claims:

• Assembly
• Brakes/ABS
• Damage from overheating
• Drive axle
• Electrical system
• Engine
• Fuel system
• Gas delivery
• GPS/navigation
• Heating/AC
• Key fob replacement
• Mechanical breakdown
• Parts and labor
• Rental car coverage
• Road hazards
• Seal and gaskets
• Steering
• Suspension
• Tire repair/replacement
• Towing
• Transmission
• Trip interruption

Most extended warranties don’t include the following:

• Airbags
• Catalytic converters
• Consumable items (brake pads, rotors, shocks, light bulbs, etc.)
• Convertible tops
• Emissions
• Misuse or abuse
• Muffler and exhaust
• Routine maintenance
• Safety restraint systems

Factors That Affect Cost

Extended car warranties for older vehicles and vehicles that are more expensive to repair tend to come with higher premiums than newer ones, but many factors affect cost, including those listed below:

• Make
• Model
• Year
• Mileage
• Preexisting conditions
• Provider

What Is a Good Price?

Warranty prices can be around $1,500 to $1,800 per contract, and deductibles typically range from $0 to $250. Depending on the provider and the contract, you could make your warranty payments over several months or as a one-time payment.

You can buy an extended warranty any time after your initial new car purchase, but keep in mind that the price on your loan may increase the longer you wait to buy it.

Extended car warranties are optional, but they provide additional coverage that can save you money in the long run. The average cost of an engine in 2022 was about $4,000, so one engine replacement could save you thousands of dollars.

Here are a few reason to get an extended car warranty:

• Your car is very unreliable, especially if it’s a used car.
• It’s an exclusion warranty, meaning the warranty covers everything except for specific items that you don’t need coverage on.
• The cost is reasonable. Most drivers never need to use their extended warranties, so your cost shouldn’t be too high.⁶
• You plan on keeping your vehicle for a long time, as you are more likely to need to repair your car the longer you own it.

It doesn’t make sense to get an extended warranty if any of the following is true:

• You have coverage under the manufacturer warranty.
• You have a reliable car.
• You have an inclusion warranty, which isn’t comprehensive and only covers specific parts of your vehicle.
• An extended warranty company has poor reviews and ratings. Many extended warranty companies close down, so check the reviews on third-party systems like BBB and Trustpilot.

Where to Purchase

If you’re going with a third-party warranty provider, you can check how many complaints it has through your state consumer protection office.⁷ Otherwise, go directly through the manufacturer. Edmunds has a list of major manufacturer warranty providers that you can find here: https://www.edmunds.com/auto-warranty/how-to-get-the-best-price-on-an-extended-car-warranty.html.

When to Purchase

The ideal time to purchase an extended warranty is when you finance your vehicle. That way, you can integrate your warranty costs into your car loan.

Questions to Ask

When working with a provider or manufacturer, ask the following questions:

• Can I negotiate the price?
• What is and isn’t covered?
• How long is the extended warranty?
• How do I make a claim?
• Can I transfer the warranty?
• Can I cancel the warranty?
• Do I have a separate budget for maintenance?

Keep these factors in mind when using your extended warranty.

Repairs

Most extended warranties have networks of approved repair shops. In some cases, you’ll have to go to one of these shops for your provider to cover the claim.

Some extended warranties have money-back guarantees within a certain time period, while others may charge a cancellation fee. If you paid in full for your warranty, providers will usually offer a prorated refund.

The alternative to an extended warranty is mechanical breakdown insurance (MBI), but which one should you choose?

Here are a few major differences between the two:

One of the main differences between the two is the scope of coverage. Mechanical breakdown breakdown insurance covers all mechanical parts and systems, while extended warranties only cover a specific list of items.

Most mechanical breakdown insurance policies will allow you to get repairs from any shop or mechanic.¹⁰

Do I Need MBI or a Warranty if My Car Is New?

If you have a new car, it’s probably best to go with mechanical breakdown insurance. Although you’ll have to renew your insurance more frequently, you’ll have more coverage, more choices for repairs, and lower rates.

There are, unfortunately, a number of auto warranty scams that you should be aware of when entering the car warranty market. The below tips will help you steer clear of scams and find reliable providers.

• Don’t trust any third-party provider that offers to extend a factory warranty. Only manufacturers can extend a factory warranty. If a third-party provider claims to be able to extend your factory warranty, it’s a scam.
• Don’t trust callers that use phrases like “motor vehicle notification,” “final warranty notice,” or “notice of interruption.” According to the Department of Commerce and Insurance, scammers often use these phrases to create a sense of urgency.
• Don’t give out any personal information. Scammers will try to get ahold of your Social Security number, credit card information, driver’s license number, and other key information. Do not give out this information or any personal information online or over the phone.
• Avoid callers who ask for a “processing fee.” If the caller tries to charge you a fee over the phone, it could be a scam.
• Be wary of providers who say you need to take immediate action. If someone is rushing you to take action — whether that is providing them with information, completing a payment, or something else — there’s a good chance they could be a scammer.
• Don’t answer calls from unknown numbers. Calls from unknown numbers are suspicious, and you shouldn’t answer them. If you do answer, hang up immediately.
• Verify their number. If you have access to their number, type their number into your web browser and see what comes up.
• Download a call-blocking app. RoboKiller, for example, stops 99 percent of unwanted spam calls and texts and is available on iOS and Android devices.
• Check your warranty’s expiration dates/terms. If you’re still under warranty, the call might be a scam.
• Research the company before extending coverage. The BBB is a great resource for reviewing customer complaints.
• Input your number into the Federal Trade Commission’s (FTC’s) National Do Not Call Registry. Minimize the number of spam calls you receive by registering with the FTC’s registry: https://www.donotcall.gov/register.html#step1.