Around 12 years ago I bought a used car at a dealer. They offered me an extended warranty for a few hundred dollars. At the time it seemed like a decent price for the added protection so I went ahead and bought it. In hindsight I realize it wasn't such a smart idea.
One red flag should have been how they pushed the warranty on me. It was offered by the finance guy at the end of the discussion along with the other addons such as rust proofing. This is normally where I think car dealers try to pad their profits by tacking on anything they can can sell you with a high margin. Worst of all he claimed that I had to buy it then or I wouldn't have the offer later. That claim should have been a red flag as anything worth it for them to sell me today they should be just as happy to sell tomorrow or next week. This was a definite high pressure sales tactic and generally in those situations its best to say no. Don't let a salesman try to pressure you into any purchase.
After I bought the warranty I did some online research and found out that I could have instead gotten a warranty on my own with better coverage for a lower price. So no surprise, I over paid for the extended warranty by getting it from the dealer compared to going straight to an independent car warranty company. Another reason my warranty wasn't a good buy was that it didn't actually seem to cover all that much. After I got the warranty and had the car a while I had a couple things break down. The first thing was very minor and I had to pay almost all the costs due to a $100 deductible. The second thing wasn't covered at all. I got virtually no benefit from the warranty. Lastly the warranty required that I have my car serviced at the dealer that I bought the car from. This forced me to go to one dealer and pay their prices anytime something went wrong. If I wanted warranty coverage for anything then I had to go to them and pay them the $100 deductible for anything they did.
Normally I say no to extended warranties for products like electronics but with a car I figured the potential cost of repairs would be very high so a warranty might be a good idea. Honestly that still seems like a relatively good idea to me. Car repairs can be very pricey and having a warranty on such a big ticket item makes some sense to me. My sister paid about $8,000 a couple years ago to get a new engine installed in her 10 year old SUV. If she had bought a good extended warranty then she could have avoided much of that cost.
I got an instant quote from Auto Service Warranty and this is what the rates are:
|Warranty||Add on Miles||Coverage|
The mileage rates are above the amount already on the odometer.
Even though they have an instant quote function that asks you your car make, year and mileage I think they quote the same warranty coverage and rates for all results. It seems these are standard rates for any make of car going back to year 200 models. So the cost is in the range of $337 per year for a 5 year warranty to $550 annually for 2 years. Here's another site with some more prices listed.
The coverage is listed on their site and it seems pretty extensive. If you're seriously interested in buying an extended auto warranty then I'd strongly recommend you get a copy of the actual contract details to find out everything that is and is not covered. The details of the fine print will be pretty important as I found out with the warranty that I bought.
Auto Service Warranty is one company and there are others like WarrantyDirect.com and Nation Warranty Corporation (NWC). However they want name and phone number info to give quotes online which I don't like to do if I'm just researching.
Is an Extended Warranty a good idea?
Back to the original question. Honestly I think that extended warranties can be an OK buy but it really depends on the situation and your own risk tolerance. A bad warranty is not a good buy so its key to make sure you get a good warranty. If you find a good warranty and you want the added protection then it could be a good buy for you. You could also do just as well self paying on repairs for your car if you're comfortable with the risk of high cost repairs on an older vehicle. Bottom line is that whether or not a warranty is a good idea depends on your own risk tolerance and if the warranty itself is a good one.
If you do think a warranty would suit you well then here's some key things to look for when comparing extended auto warranties:
2. Details of coverage. - Look for coverage of 'wear and tear'. It would be a good idea to have your mechanic look at a contract first to see if its any good.
3. Your choice of mechanic. - Make sure the warranty lets you pick which mechanic you go to.
4. Reputation and reviews for the warranty company. - Check out the warranty provider in advance. Try to find reviews of them online. Check their BBB rating and insurance rating.
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