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While it may sound like a good idea in theory, extended warranties often come with a high price tag and don't necessarily cover everything that could go wrong. Plus, many people who buy extended warranties never use them. In that case, an extended warranty becomes a cost with no financial return.
In general, we don't recommend buying an extended warranty on a used car. Warranty companies are in business to make money, and they've usually done their homework. This means you'll likely spend more on the warranty than any repair costs your car may accrue during the period when the warranty is valid.
This isn't surprising, because extended warranties make a lot of money for those who sell them. On average, you'll pay about $1,500 on an extended warranty, and the average repair is $180. I don't recommend buying extended warranties, ever. If you can't afford a $200 repair on a car, then you can't afford the car.
An extended car warranty may help cover the cost of certain repairs to your vehicle when the manufacturer's warranty expires. While it may sound like a good idea in theory, extended warranties often come with a high price tag and don't necessarily cover everything that could go wrong.
In general, the average extended car warranty cost ranges from $350-$700 per year, but every person and policy is different. When your car needs repairs, and you don't have coverage, the mechanic will require payment in full.
The warranty doesn't pay for routine maintenance such as oil changes and tire rotation. New cars come with a bumper-to-bumper 'factory' warranty for at least three years or 36,000 miles. Over the years, manufacturers have realized that including a stronger warranty is a good selling point.
In fact, you can usually buy a warranty any time before the car's manufacturer warranty expires. Moreover, you don't have to buy it from the dealership where you purchased the car. The only advantage to buying it as part of a new-car purchase is that you can roll it into the financing and monthly payments.
While it may sound like a good idea in theory, extended warranties often come with a high price tag and don't necessarily cover everything that could go wrong. Plus, many people who buy extended warranties never use them. In that case, an extended warranty becomes a cost with no financial return.
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