Are Extended Warranties Worth it?

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


, - January 25, 2018

For the potential car buyer, initial decisions surrounding a purchase extend beyond the car itself. Before a consumer can drive off the lot, there are options to go over with the dealer, including the purchase of extended service contracts.

Extra Coverage Can Be a Gamble

For a bad credit car buyer, it’s best to have a warranty that covers a vehicle for a loan’s entire term, especially when purchasing a used car. However, purchasing extra coverage can be a gamble.

Typically, used cars are sold “as-Is” which means all costs for repairs, parts, and labor come out of the buyer’s pocket. Certified pre-owned vehicles carry a manufacturer-issued, factory-backed warranty on certain major systems – terms vary from one brand to another – but buyers may still need additional coverage to avoid out-of-pocket costs. Depending on the vehicle, this cost could make purchasing an extended warranty worth it. But consumers have to be careful choosing their contract – coverage varies widely.

Know Your Coverage Before Purchasing

Car buyers should read all the fine print before signing a service contract. Contracts that cover a vehicle from “bumper to bumper” may sound good, but the policyholder may be in for a surprise if a repair isn’t included. For the best protection, buyers should get coverage for both basic mechanical breakdown (like engines and drivetrain) and any additional systems they feel necessary (like electrical, wheels, technology, or safety). Claims can get costly without the right policy.

Make sure the contract covers all the extras that go with the maintenance. If a service plan doesn’t include towing or roadside assistance, something as simple as a blown tire can rack up high costs. If a vehicle is worked on for several days, good coverage won’t leave a person stranded.

Additionally, consumers should know how their contract provider handles payments. Peace of mind can be one of the biggest advantages of an extended service contract, but a plan that requires large deductibles or only reimburses consumers doesn’t provide that.

How Do I Know If I Need Coverage?

Paying for extra coverage is only worthwhile if it serves its purpose. So, getting the right coverage is the key to this benefit.

A car that will mostly see the inside of a garage, with occasional trips to the doctor’s office or grocery store, may not need top-of-the-line coverage – and skipping it could save the buyer hundreds. On the other hand, if a car’s purpose is to commute an hour or more through heavy traffic on a daily basis, extra coverage could save a policy holder on repair costs.

Think about all the factors that might impact the need for an extended warranty like vehicle age, mileage, and condition when deciding. Ultimately, the decision to purchase additional coverage is up to the individual’s needs.

Need to Get Back on the Road?

If lack of coverage has left you stranded, and it’s time to finance your next vehicle, CarsDirect wants to help. We work with a network of special finance dealers that have lending resources available to help people facing difficult credit situations. Finding a dealer can be simple, just fill out our online auto loan request form to get started today!

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


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