How Much Should a Extended Warranty Cost?
The costs of car buying and vehicle maintenance can be tough on any car owner’s wallet. That is why many are enticed to buy an extended car warranty due to the promise of ongoing protection beyond the traditional warranties offered by car manufacturers and dealerships. How much does a extended warranty cost? And is the price tradeoff worth the incentives you can enjoy?
It’s an ongoing debate: warranties can either be a smart financial investment or a needless expense. Keep reading to find out what factors affect the extended warranty costs, and how you can save.
Key Takeaways
• An extended car warranty offers protection for your vehicle to cover unexpected repairs even after the new vehicle warranty has expired.
• An extended car warranty costs approximately $2,500 with some vehicle owners paying up to $3,200.
• An extended car warranty cost is influenced by various factors, such as the vehicle’s age and mileage, the vehicle make and model, the vehicle reliability, and labor costs.
• Consider the provider’s industry standing, customer service and industry standing, and your budget in choosing the best extended car warranty.
What is an Extended Car Warranty?
An extended car warranty is a vehicle protection plan with the provider to reimburse the car owner for the cost of automotive repairs. Several issues could arise throughout the vehicle ownership and an extended warranty offers coverage even when the free warranty coverage from your dealership has expired (which is typically available for a limited period).
As such, an extended car warranty, like the Mopar extended warranty, is available through a third-party provider. You may use it to supplement your existing warranty after the new vehicle warranty has expired. Similar to the warranty from the manufacturer, the cost and extent of coverage differs from brand to brand.
What Does an Extended Car Warranty Cover?
When comparing extended car warranties, you need to ask this question. It is important to be aware of what the costs cover so you can understand if the cost is worth it.
A typical extended warranty covers automotive repairs; however, it should not be due to wear and tear or negligent maintenance. Below is an example of key services offered in an extended car warranty:
• Mechanical Breakdown – It covers the repair and replacement of parts and components of a car that includes but are not limited to the transmission system, steering, fuel system, heating and cooling, anti-lock braking, cruise control, airbags, and more. Most hybrid and alternative fuel parts are also covered.
• Roadside Assistance – Most extended car warranties include towing of cars to the nearest servicing facility. This service can also cover flat tire replacement, jumpstart for dead battery, and fuel delivery. In most cases, it can also cover winching your car from mud, snow, or sand, but only if it is accessible from the road.
• Travel Protection – The extended car warranty covers the lodging and meals for vehicle owners, if they should encounter any car troubles beyond 150 miles from home (or depending on the specific service agreement with the provider).
How Much Should a Extended Warranty Cost?
There is no set rate for an extended warranty cost as it varies from one provider to another. In the US, the median cost is $2,500 with most car owners paying at least $1,700 and some paying up to $3,200.
This estimate should give you a starting point when comparing different warranty coverage options and assess how much you are willing to pay, depending on the extent of coverage.
Factors Affecting the Extended Warranty Cost
Based on the above information, the extended warranty cost could differ largely based on various factors. You need to analyze the factors that influence pricing to answer this question: how much should a extended warranty cost?
Vehicle Make and Model
The different car makes and models also differ in the costs of running them. Therefore, warranty providers charge accordingly for these costs. The number one indicator of an extended warranty cost is the make and model.
The rule of thumb is you can expect to pay more for a warranty when you drive a more expensive car. It’s because the cost of replacing and fixing the parts can be more costly.
Vehicle Reliability
A car’s expected reliability is a huge factor that impacts the extended warranty cost. It is based on industry ratings that determine the anticipated cost of repairs and the frequency with which they will require repair. The more reliable a brand or model is, the less the costs associated with an extended car warranty.
Vehicle Age and Mileage
A car’s age and mileage can impact the extended warranty cost because it determines how likely your car is going to experience issues and mechanical breakdowns. A newer vehicle is expected to drive much longer without needing a repair versus a used car with a higher mileage.
Choice of Provider
Different warranty providers will have a set formula on determining the extended car warranty costs on your vehicle. Therefore, it is a good practice to collect quotes from multiple providers so you can compare the costs and coverage.
Coverage Level
The extent of your coverage in the extended car warranty will play a huge factor in determining the amount you must pay. The more expensive plans will offer a more comprehensive coverage, while the lower tiered plans will have lesser coverage. Therefore, you should choose your coverage level according to your needs.
Term Length
The longer the coverage is, the more expensive it will cost. Consider this when choosing extended car warranties to determine how much value you can get for the price you are paying.
Deductibles
The amount of deductible you get for your extended car warranty will determine the amount you have to pay. A lower deductible translates to a higher warranty cost. Choose a deductible that you are comfortable with.
Labor Costs
The current labor rates in the market can also impact the final costs of your extended car warranty. It is one of the factors that many car owners overlook, but make sure to factor this into determining a budget for your car warranty.
Tips When Buying an Extended Car Warranty
While the cost of extended car warranties being a necessity or a needless expense is much debated, you need to know these tips when you decide it is worth investing in. These tips help you make an informed decision and enjoy the best protection.
1. Coverage
Learn about the ins and outs of your warranty coverage before deciding to purchase it. Getting the specific information of what is covered and what isn’t will give you a better idea of the value that your coverage offers.
2. Length of coverage
Aside from the extend of coverage, the length of term will help determine if it’s worth paying for your extended warranty. Most extended warranties last for up to seven years. A shorter term is not ideal because you won’t be able to get the best value for your money. In addition, some warranties are transferable, such that you can include it in the vehicle if you decide to sell it even before your warranty expires.
3. Provider’s Industry Standing
Consider the industry standing of the warranty provider before choosing to agree on a plan. Check the company’s reputation and research on the feedback from customers. More importantly, focus on their customer service for clients, specifically when handling claims. A good track record will give you more confidence when choosing the provider for your extended warranty.
4. Transparency
Transparency is important when choosing an extended car warranty because you want to be able to get the information you need to make a decision. The provider must be willing to provide necessary information to help you make an informed decision, such as guarantees, sample contracts, and plan descriptions.
5. Your Budget
The final consideration when choosing an extended car warranty is your budget. Your budget will inevitably play a crucial role in any major financial decision. Therefore, factor your budget when comparing extended warranty coverage to ensure you can afford it.
Bottom Line: Is an Extended Car Warranty Worth It?
Given the rising costs of vehicle parts and components, the labor rates of an expert mechanic, and the hassle involved when your car breaks down, an extended car warranty could be a worthwhile investment.
Extended warranties make most sense of car owners that don’t intend to replace their cars after several years. It gives you peace of mind when driving your car that you can get coverage for unexpected repairs without shelling out of your own pocket. There is nothing worse than paying for a big bill when your car unexpectedly breaks down. It is especially recommended if you drive a used car, which is more prone to breakdown than a new car.
However, it is helpful to research your options for an extended car warranty to ensure you can pick the best coverage with the best value for money. Also, make sure you keep up with regular car maintenance to keep the overall costs of vehicle ownership low.
FAQs
What is the downside to purchasing an extended warranty?
The cost is the primary reason why many car owners refuse to buy an extended warranty. In addition, some coverages can have exclusions and limitations that deprive them of enjoying the full coverage they paid for.
Thus, always check the fine print and look at the detailed description of the coverage to avoid any hidden terms.
Are extended warranties worth the money?
Yes. If you consider the factors listed here, such as your needs, vehicle make and model, and term length, then it could be a worthwhile investment. It gives you peace of mind that you are covered for any unexpected repairs and replacement.
