When you purchase something as expensive as a vehicle, it’s nice to know that you won’t be on the hook to cover the cost of repairs on components that should last at least a few years before breaking down. Considering the cost of car repairs, having a warranty that will cover these expenses can provide you with some reassurance that you won’t be stuck with a bunch of issues that you shouldn’t have to deal with shortly after buying a brand new car.
That’s why manufacturers offer limited warranties on brand new car purchases. But these plans are only for a short period of time – usually between 2 to 5 years. If you want more coverage than that, you’ll have the option to purchase additional coverage in the form of an extended warranty.
But what is an extended warranty? And is it worth spending more money on?
Key Points
- An extended warranty provides coverage for repair costs beyond the manufacturer’s original warranty.
- Typical items included in an extended warranty are powertrain coverage, electrical systems, air conditioning and heating, brake systems, and roadside assistance.
- You can purchase extended warranties from car dealerships, automakers, or third-party providers.
- Whether you choose to purchase an extended warranty depends on your budget, vehicle age, mileage, cost of car parts, and your ownership plans.
Can You Buy An Extended Warranty On A New Or Used Car?
Yes, you can buy an extended warranty for both new and used cars.
- New Cars: New vehicles tend to come with a manufacturer’s warranty, which typically lasts around 3 years and covers defects in materials or workmanship and the powertrain. However, buyers can choose to buy an extended warranty to cover issues that are not included in a typical factory warranty and to extend the warranty coverage period.
- Used Cars: Depending on how old the used car is, the factory warranty may have expired. In this case, buyers may choose to purchase an extended warranty to ensure they’re covered in case a problem arises in the near future.
Learn more: Used Car Warranty
What Is An Extended Warranty On A Car?
An extended warranty is an insurance policy that covers your vehicle in case it is damaged or requires certain repairs that you may not have anticipated. While there are different warranty options, these extended warranties are designed to protect against surprise issues with your car for a certain period of time.
When you buy a new vehicle, it will come with a factory or manufacturer’s warranty that covers the first few years of the life of the vehicle, or the first few thousand kilometres of driving, whichever of the two comes first. This factory warranty will cover the cost of any repairs that are needed, as long as they are specified in the contract.
But the time frame for this coverage is limited, which is why some people choose to purchase extended warranties for their vehicles to make their coverage last longer.
What Is Included In An Extended Warranty?
The type of coverage you get with your extended warranty will depend on how much more you’re willing to pay. For instance, some extended warranties may only cover the cost of a breakdown. That said, you can expect the following to be covered in most extended warranty plans:
- Powertrain warranty – Most basic extended warranty plans cover the cost of the engine, transmission, and driveshaft. Since these components tend to be more prone to breaking down, the warranty that covers them usually lasts longer.
- Bumper-to-bumper coverage – Just about everything from the front to back of the vehicle will be covered under both a factory and extended warranty. The manufacturer’s warranty will usually cover anywhere between 3 to 5 years while purchasing an extended warranty will add another couple of years to the coverage.
What Is Not Included In An Extended Warranty?
While an extended warranty may provide added coverage that a manufacturer’s warranty may not cover, or to bridge the gap after the factory warranty expires, it doesn’t cover everything, including the following:
- Tires
- Brake pads
- Seat belts
- Headlights
- Stereo systems
- Issues related to regular wear and tear
Where Do You Buy Extended Warranties?
When you buy an extended warranty, you’re buying it either from the manufacturer or a third party. For instance, an extended warranty bought from Honda or Mazda will be from the manufacturer directly and can only be purchased at specific dealerships.
Otherwise, you can purchase an extended warranty from a third-party company that is not affiliated with the manufacturer or dealership. These can be applied to both new and used vehicle purchases. When dealing with third parties, however, it’s important to be diligent about who you deal with to ensure the company is legitimate and trustworthy before signing a contract with them.
When Can You Buy An Extended Warranty? Manufacturer Warranties Vs. Aftermarket Warranties
If you decide to buy an extended warranty, you can wait until after the factory warranty has ended or while it’s still in effect. As such, you’ll have a longer coverage period.
Manufacturer Extended Warranties
Extended warranties from a manufacturer are basically an extension of the original factory warranty, which means anything that is included or excluded will stay the same. The only difference is the actual coverage period, which extends past the original factory warranty period, up to a limit.
The extended period is typically established ahead of time.
Aftermarket Extended Warranties
Extended warranties from third-party companies are a bit different. These warranties may have different inclusions and exclusions, as well as different perks and terms, since they’re not from the manufacturer.
Like manufacturer warranties, aftermarket warranties also have coverage limits. However, with third-party warranty companies, you might get more coverage options and maybe even the ability to tailor the coverage terms for your car.
Are Extended Warranties Worth It?
Considering the fact that you are spending a great deal of money on your new car, you may be wondering if buying an extended warranty is worth it, especially since you’re already getting a factory warranty. Before you decide to either buy or forgo an extended warranty purchase, consider what category you align most with:
| When To Get An Extended Warranty | When Not To Get An Extended Warranty |
| The vehicle has very high mileage. | The car has low mileage & a comprehensive maintenance service history. |
| You have an expensive or luxury vehicle that costs a lot to repair. | The car has cheap parts that are widely available. |
| The original manufacturer’s warranty is close to expiring. | The car is relatively new and still covered under the factory warranty. |
| You plan to keep the car for a long time. | You plan to sell or trade in the car soon. |
Pros And Cons Of An Extended Warranty
There are perks and drawbacks to an extended warranty, whether for a new or used vehicle, which you should consider before buying coverage.
Pros Of An Extended Warranty
Advantages of an extended warranty are as follows:
- Customized Coverage: You can customize the warranty to suit your needs. Companies that offer extended warranties provide more products and service selection, allowing consumers to tailor the plan to make it just right for them. If you want to add 24-hour roadside assistance, for instance, you can add that to your warranty so it provides you with exactly what you’re looking for.
- Expensive Repairs Covered: Extended warranties cover expensive repairs. These days, vehicles are heavily computerized, and when components break down, they can be extremely expensive to fix or replace.
- Increased Resale Value: A vehicle with an extended warranty may be more attractive to buyers if you plan to sell in the near future.
- Convenience: Some extended warranties come with towing, roadside assistance, and rental vehicle coverage, making it more convenient to deal with these issues directly throughout your plan rather than having to seek out assistance — and pay extra — outside of the warranty.
Cons Of An Extended Warranty
Disadvantages of extended warranties include the following:
- They’re Expensive: Obviously, an extended warranty means you’re dishing out more money after you’ve already paid for your car. That said, you may be able to negotiate to get the price of your extended warranty down.
- Not All Repairs Are Covered: There are always exclusions to extended warranties, so it’s in your best interests to read the fine print to make sure you know exactly what is and isn’t covered in your particular policy.
- Limited Pool Of Repair Companies: If and when you need to have your car repaired while it’s under the extended warranty time frame, you may be limited in the mechanics that are designated to make the repairs.
- May Be Of No Use: It’s possible that you may be paying for something you never end up using with an extended warranty. That said, this may be better than actually having to go through the nuisance of having to take your car to be repaired and dealing with claims.
How Much Does An Extended Warranty Cost In Canada?
The average cost of an extended warranty in Canada ranges from $1,000 to $2,000. However, the cost can be much higher depending on the extent and duration of the coverage.
What Factors Impact The Cost Of An Extended Warranty?
The actual cost of an extended warranty depends on several factors, including the following:
- Vehicle make and model
- Age
- Mileage
- Coverage amount
- Coverage duration
- Source of the plan (ie. manufacturer or third-party provider)
Questions To Ask Before Purchasing An Extended Warranty
Before you agree to buy an extended warranty, be sure to ask some of the following questions first:
- When will payment have to be made if a repair is required – before or after the repair is made?
- Is there a deductible that has to be paid before a repair is made?
- How long will it be until I am reimbursed?
- Will my car be replaced with new or used parts?
- Can I make another claim for the same part a second time if necessary?
- What exactly is not covered in the warranty?
- What are the rules on regular maintenance in order to ensure the warranty covers repairs?
The answers to these questions will help you get familiar with what an extended warranty offers, how much it costs, and whether it’s an added purchase that may or may not be worth it.
Final Thoughts
It’s nice to know that your car is covered for damage, especially when considering the hefty price tag for a car. You can extend that reassurance if you purchase an extended warranty. That said, purchasing additional coverage should only be done after careful consideration and only if it makes sense for your car and your situation.
