Get an Extended Auto Warranty Quote

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The cheapest warranty may not be the best coverage.

One of the biggest mistakes people make is buying an extended car warranty based on price alone. Just because a warranty is cheaper does not necessarily mean it’s the best warranty for you.

Purchasing a cheap policy from a fly-by-night company may save you a little bit of money now, but may end up costing you plenty when you have to file a claim in the future. Some of these companies may not still be in business for you to file a claim with.

When you call the customer service line to some of these “cheaper” companies you get a rude customer service rep ready to give you the fight of your life if they answer the phone at all!

Some of these rogue warranty companies may call you on the phone, email you, send you a cheap post card, or an official looking letter in the mail offering cheap coverage. You must be careful with these types of companies and review them thoroughly. We advise to avoid them altogether.

How some warranty providers offer a cheaper price:

  • Exclude certain vital coverage’s
  • Make excuses to not pay a warranty claim
  • Make you pay for the repair upfront before making a claim
  • Include per repair item deductibles

    When a warranty provider sells their extended service contracts too cheap and the customer claims start to roll in, something has to happen. The first thing the warranty company does is make up excuses to deny or reject your repair claims over minor technical issues, this is the only way for the company to stay afloat.

    Always do research before buying coverage from a warranty provider. Check to see if there’s any information about the company with the Better Business Bureau, Web Assured and/or the Vehicle Protection Association.

    The companies refinanceratecalculator.com recommends have a long standing history and are listed with one or more of the companies above. If there’s no information about the warranty company with these sites, their policies are most likely not worth the paper they’re printed on.

    When selecting a warranty, make sure you get the coverage that meets your individual driving needs. You will also want to select the coverage that’s important to you, but don’t over-spend by selecting coverage that you will never need.

    How much do dealers markup auto warranties?

    Car dealerships make large profits when selling extended warranties to car buyers. A policy that costs a dealer $800 can be marked up to a retail price of $2,500 or more, that’s a profit of $1,700 from the sale of just one extended warranty.

    Let’s say a dealership sells 300 cars a month and only half (150) of those people bought an extended warranty. Now let’s be conservative and say each customer only paid $2,000 per warranty. 150 X $1,200 (profit) = $180,000 in just one month on warranty sales. Not a bad month for that dealer.

    I’m not faulting the dealer for making money, that’s why they do what they do. I just want to give you an idea of why you should explore all your alternatives when it comes to buying an extended warranty from a car dealership. It never hurts to shop around.

    What is an extended car warranty?

    An extended warranty — also known as a vehicle service contract — is an optional plan you can buy to help you pay for the cost of certain repairs your vehicle may need while you own it. It usually begins when the manufacturer’s warranty expires, but sometimes the two overlap.

    But an extended warranty doesn’t cover everything.

    “Most warranties you purchase do not cover the same amount of parts that the original factory warranty [covers], so you have to be careful as to … the level of coverage it provides,” says Steve Roberts, auto buying concierge at Ardent Credit Union.

    Extended warranties usually don’t cover routine maintenance, either — things like oil changes, new tires, new brakes and more. Roadside assistance is typically a separate purchase as well.

    To find out for sure what an extended warranty does and doesn’t cover, read the agreement’s fine print carefully.

    True cost of an extended auto warranty

    My advice is to not roll the cost of a warranty into your car loan. If you have the means to pay for your extended warranty separate, do it. We understand that some people are unable to pay for it separate. If you’re unable to pay cash for it, you may want to use a low interest credit card.

    When you buy a car from a dealer, they’ll likely ask if you want to purchase an extended warranty to go with it. But much like the financing they offer, dealerships tend to mark up the cost of extended warranties to make a profit.

    If you’re serious about purchasing one, consider negotiating with the dealer to get the price down or check out some independent providers.

    Coverage options vary widely, and the cost you’ll pay varies based on what the plan covers and the make and model of your car. The upfront cost of the warranty can range from $1,000 to $3,000 or more. Plus, if you roll the cost of the warranty into your auto loan, you’ll pay interest — and potentially fees — on it.

    You may also be required to pay a deductible. Deductibles are usually charged in one of two ways — per repair or per warranty service visit. It’s important to find out how deductibles work for your plan, because if a problem can’t be fixed in a single trip to the repair shop, you may end up paying multiple deductibles for one repair.

    How an extended warranty affects your payment
    Warranty CostInterest RateAdded to PaymentTotal Warranty Price
    $1,0005%$18.07$1,084.20
    $1,2505%$23.59$1,415.40
    $1,5005%$28.31$1,698.60
    $1,7505%$33.02$1,981.20
    $2,0005%$37.74$2,264.40
    $2,5005%$47.18$2,830.80

    Extended car warranties: New and used cars

    When you buy a new car, you probably won’t need to use an extended warranty right away because the manufacturer warranty — which is typically included in the price of the car — covers the cost of most repairs for the first few years you own the car.

    However, if you buy a used car from the dealer, it may not be covered under the manufacturer’s warranty. To find out, look for the Buyer’s Guide on the car window. It should let you know whether the car is being sold with a warranty. If it is, you may need to pay a fee to have it transferred to you.

    If you’re buying a car that’s no longer covered by the manufacturer warranty or you want additional coverage after it expires, you may buy an extended warranty for an extra fee.

    Frequently Asked Questions About Auto Warraty

    How dealers make money on auto warranty sales.

    Car dealerships make large profits when selling extended warranties to car buyers. A policy that costs a dealer $800 can be marked up to a retail price of $2,500 or more, that’s a profit of $1,700 from the sale of just one extended warranty.

    Do I have to buy a warranty from a dealership?

    Car dealers want you to believe you must buy an extended warranty from them at the time you take delivery of your vehicle. Some finance managers may tell you if you want a warranty, you must buy it now.

    How long does the manufacturer’s warranty last?

    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.

    Should I get an extended car warranty?

    It may be tempting to purchase an extended warranty plan to protect against unexpected repair costs. But before you do, consider both the pros and the cons.

    How to get extended auto warranty quotes online

    It’s very easy to request new and used car extended warranty quotes from the companies we recommend. You can take advantage of these free; no-obligation quotes to comparison shop and use them as leverage when negotiating the price of an extended warranty while at a car dealership.

    Remember, it’s not necessarily the cheapest priced warranty coverage that’s right for you;you’ll want to find the best value for the money. Once you pick the plan that’s right for you, print it out and keep it with you for when you visit the dealership.

    Conclusion

    An extended warranty could add thousands of dollars to the purchase of a car. This may not seem like much if you’re financing it and rolling the cost of the warranty into your monthly payment. But it still can be a significant amount of money, even if you’re not paying it all up front.

    If you’re buying a vehicle with a reliable track record, it might make sense to skip the warranty. Instead, consider setting aside the money you’d spend on it, and save for that rainy day when something could go wrong. If you don’t end up needing the money for repairs, you can keep saving it or use it for something else.

    Ultimately, it’s up to you to decide whether the peace of mind an extended warranty can provide is worth the price tag. If you do decide to purchase an extended warranty, be sure to do your homework, watch out for auto warranty scams and work with a reputable company.