WalletHub, Financial Company
Extended car warranties are worth it if a driver doesn’t carry sufficient savings to pay for vehicle system repairs or is worried about their car’s reliability. But for most drivers, extended car warranties go unused, so the potential benefits are not enough to justify the upfront cost.
When An Extended Car Warranty Is Worth It
A good time to consider the value of an extended warranty is when the manufacturer’s warranty on your vehicle has expired or will expire soon. This typically happens after three years or 36,000 miles, depending on which comes first. If you plan on keeping your car beyond the manufacturer warranty’s expiration, then purchasing an extended warranty might give you peace of mind moving forward.
An extended warranty might also be worth it if you’re concerned about your ability to pay for major mechanical repairs in the future. Car repairs cost about $400 on average, which is less than the $1,500 average for an extended warranty. On the other hand, the least common and most catastrophic mechanical failures can often cost several thousands of dollars to repair.
If your car isn’t very reliable and you’re not in the financial position to risk either paying for repairs or replacing the car yourself, it might be worth it to pay a higher upfront cost for protection through an extended warranty.
When An Extended Car Warranty Isn’t Worth It
- Your car is reliable
- Your car is not worth very much
- Your car is still covered by the manufacturer’s warranty
- You have a large enough emergency fund to pay for major vehicle repairs
Bear in mind that you don’t have to purchase an extended warranty when you buy your car. It’s likely a smart move for you to wait until the manufacturer’s warranty is about to expire to evaluate your situation and determine whether you want to pay for an extended warranty. To learn more, check out WalletHub’s guide to the best extended car warranties.
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