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Do You Buy an Extended Warranty or Not?


Do you buy an extended warranty on a vehicle or not? The answer is NO, you do not buy an extended warranty whether it is a new or used vehicle. A 2016 survey conducted by Consumer Reports stated that ‘only about half of those who purchased an extended warranty for a used car from model year 2000 or later actually filed a claim over the past five years’. This is another reason why we stress the importance of having a pre-purchase inspection performed on a vehicle before you purchase it. Consumer Reports also states, ‘It’s rare that the premium you pay will equal the amount of a paid repair claim down the line’. After spending 45 years in the automotive industry, we have only seen a couple extended warranty companies that would pay the full amount on any given claim.

Most of the issues found on vehicles are normal wear and tear, which is considered a usable item by the insurance companies and they WILL NOT pay. Most extended warranties include fine print that the average consumer cannot understand and most have a limited amount they will cover on any area of the vehicle. This limited coverage includes services such as transmission repair, engine repair, A/C repair and so on. Other items that are not covered under these warranties include the full labor per hour, price on retail parts, shop supplies or sales tax.

We’ve learned from experience.

We recently had a customer that had a bad alternator on his vehicle. After reviewing his extended warranty, the contract read that it would cover the alternator bracket but not the actual alternator. Again, after 45 years of working the automotive industry, it’s rare to see a bracket brake, to speak numbers it’s only been once we’ve seen this on a vehicle. Bottom line, the service that he was needing performed was not going to be covered by his extended warranty.

So, when you’re purchasing a vehicle, new or used, don’t feel pressured into purchasing the extended warranty. The car salesman might lead you to believe that it covers everything, and that it’s as simple as adding it to the financing of the vehicle. However, now you’ll pay interest on it for however many years the vehicle is financed, then never pay if the vehicle is under manufacture warranty even if the manufacturer doesn’t pay. Take our advice, stay away from the extended warranty, after all that’s a lot of money spent for peace of mind. Rather, take that money to invest in a pre-purchase inspection and keep up with the maintenance necessary to take care of your vehicle.

SOURCE: Rechtin, Mark. “When an Extended Car Warranty Is Worth It.” Consumer Reports, Mark Rechtin, 3 May 2016,