Part of buying a new car means you’re probably going to be asked to purchase an extended auto warranty to go with it. The dealership might throw around a price or two, but can you negotiate your extended car warranty? Is it worth hashing it out in the first place?
This article will look at how you can haggle on an extended warranty to find the best price and discuss some ways to judge if extended coverage is the right move. Our research team has thoroughly reviewed the aftermarket auto coverage industry to find the best extended car warranty companies, and we’ll give our recommendations for top providers here.
What Is an Extended Car Warranty?
Before we talk about negotiating a price, we should define an extended warranty. Each new vehicle leaves the dealership with a factory warranty that covers repairs to your vehicle for your first few years of ownership. An extended car warranty takes over when a vehicle’s original coverage period ends.
There are two main types of extended warranties: bumper-to-bumper, which covers most parts between your vehicle’s front and rear bumpers, and powertrain, which just covers the most important components – the engine, transmission and drive systems.
Even though you’re not required to buy an extended warranty, if parts covered under the protection plan are defective or fail, you won’t be stuck with the repair costs. It’s also common to see extended warranties offer incentives like roadside assistance, trip interruption benefits and rental car reimbursement depending on the plan you choose.
The term “extended warranty” is also not entirely accurate, as only a vehicle’s manufacturer can offer a true warranty on a product. “Extended warranties” are really vehicle service contracts that function the same way as a factory warranty.
Can You Negotiate an Extended Warranty?
Even though you don’t have to buy an extended warranty the same day you purchase a new car, the dealership will more than likely try to sell you one. If the idea of having extended coverage after the manufacturer’s warranty expires resonates with you, there are a few things you can do to swing the price in your favor.
Do Your Research in Advance
Before even walking into the dealership, take the time to see what’s included in a factory warranty and the manufacturer’s extended warranty. How well do the plans cover your vehicle? How many options do you have to choose from? Is there any benefit of sticking with the manufacturer, or are you better off building a cheaper, more customized warranty with an independent provider? Review a car warranty comparison to gauge your service needs.
If you are looking for an extended warranty plan from your manufacturer, try calling multiple dealerships to see if one will work with you on price. Car dealerships upcharge for warranty services, but getting quotes from a few dealers can help you figure out an average rate or, at the very least, give you a starting budget.
A salesperson might try to advertise a low monthly payment on an extended warranty. While that might sound attractive, ask how the warranty factors into the overall price of the car. A dealership should be able to produce an itemized list that spells out the cost of a warranty, the car, and any other fees, taxes and services you’re paying for.
If you’re planning to negotiate with a dealership, don’t be afraid to play hardball. Come prepared with quotes from independent warranty companies and put your foot down if you’re not offered a fair price.
Buy at the Right Moment
Purchasing an extended car warranty during the car buying process can be convenient, as it allows you to fold the cost into your vehicle financing. But doing that also means paying interest on the warranty while you pay off your auto loan.
To make the purchase easier on your wallet, see if your dealership will give you low-interest or zero-interest financing. However, if you’re offered a deal that sounds too good to be true, make sure you get an itemized list of charges so you know the dealer isn’t adding in extra fees or services that offset what is being lost in interest.
Most manufacturers allow you to buy an extended warranty at any time from before the factory warranty expires, so you should have at least a few years to shop around at other dealerships. You can also buy an extended warranty from an independent provider at almost any point in a car’s life, but it will be cheaper if you do it while your vehicle is newer rather than older.
Selecting Coverage and Deductibles
The amount of coverage and the deductible you choose influence the cost of your warranty. Most providers offer tiered levels of repair protection that let you pick between basic powertrain coverage and comprehensive plans that cover hundreds of parts across the vehicle.
Similar to auto insurance companies, going with a premium plan and a low deductible usually means paying more for a warranty, while choosing basic coverage and upping your deductible will drive down the price. Just remember to review the fine print of any warranty contract before you sign it so that you know exactly what parts are included and excluded.
An extended warranty doesn’t cover everything that happens to a car. Warranties are meant to replace parts that fail or suffer from defective workmanship, not things that would be the fault of the owner or covered by car insurance.
Common exclusions include:
Wear-and-tear parts like wiper blades, tires and brake pads
Routine maintenance services
Damage from the environment (fire, flood, tree fall)
Damage from a collision
Damage from abuse or neglect
Damage from improper repairs
Is an Extended Warranty Worth the Cost?
Even before you start negotiating the cost of an extended warranty, you should decide if a protection plan is worth the investment. When assessing this, here are a few key things to consider:
How Long Will You Have the Car?
An extended warranty sounds great on paper. Potentially having unexpected repairs covered once the factory warranty ends seems like a great choice. However, if you don’t plan on owning your vehicle for more than a few years, an extended warranty doesn’t make much sense.
A lot of carmakers offer comprehensive factory warranties that last between three and five years. If you’re planning on selling a car soon after the factory warranty expires, then you wouldn’t need an extended warranty. That said, some extended warranties are transferable and may be attractive to buyers if you’re selling your car on the private market rather than trading it in.
How Dependable Is Your Vehicle?
If you drive an especially dependable vehicle, you may not need warranty coverage. You can check a site like RepairPal or look at J.D. Power studies to see how reliable your vehicle model is and how much repairs may cost.
Dave Sargent, vice president of the global automotive wing of J.D. Power, noted in the 2021 U.S. Vehicle Dependability StudySM that vehicle reliability is at an all-time high.
“The study results validate what we have known for some time,” Sargent said. “Automakers are making increasingly dependable vehicles – but there are still some problem areas that need to be addressed and some warning signs on the horizon.”
If you find that your vehicle isn’t considered reliable, an extended warranty may save you hundreds or thousands of dollars in repair costs down the road.
Where Is the Warranty Coming From?
It’s no secret that the auto warranty industry has a bad reputation for robocalls and scams, so make sure any vehicle service contract you consider is coming from a reputable business.
Dealerships are usually safe bets because they’re looking to connect buyers with warranties from the manufacturer, but aggressive tactics by telemarketers will sometimes try to paint buying an extended warranty as an urgent decision.
If you’re unsure about a warranty provider, look at the company’s Better Business Bureau (BBB) profile or search for companies that try to scam car owners. We’ve also reviewed some of the most reputable extended car warranty companies if you’re looking for a provider you can trust.
Our Recommendations for Extended Car Warranties
If an extended auto warranty appeals to you, we recommend doing research and collecting quotes from multiple providers. In our industry review, our team found Endurance and CARCHEX to be two great choices for coverage.
Endurance: Best Provider
Our pick for the best warranty provider of 2021 is Endurance. We give the company an overall rating of 9.6 out of 10.0 based on its prices, customer service and coverage options.
Available in all states except California, Endurance has six coverage plans that protect vehicles for up to 8 years or over 200,000 miles. Besides offering comprehensive bumper-to-bumper coverage and powertrain plans, all Endurance warranties come with perks like roadside assistance. To learn more, read our complete Endurance warranty review.
CARCHEX: Runner-Up, Best Provider
Our second choice for best provider is CARCHEX, which has distinguished itself for offering one of the longest extended warranties in the industry. Some of CARCHEX’s coverage plans last up to 10 years or 250,000 miles.
Available in all 50 states, CARCHEX has forged a solid reputation with an A+ rating from the BBB and earned endorsements from automotive research heavyweights like Kelley Blue Book. You can get more details about the company in our full CARCHEX review.